The Pensions Regulator (TPR) has published guidance to improve equality, diversity and inclusion (EDI) in pension schemes.
The guidance contains suggestions and reminders for trustees and sponsoring employers of occupational defined contribution (DC) schemes, master trusts, and defined benefit (DB) and hybrid pension schemes.
These include:
- Ensuring the responsibilities of the chair include playing a key role in making boards more diverse and inclusive. The guidance includes advice on some of the EDI-related considerations an employer will wish to consider when appointing a chair.
- Pension schemes having an EDI policy, which covers an agreed definition of EDI, the EDI aims of the trustees and an EDI training plan along with assessments of the performance embedded into processes.
- Agreeing at the start of the scheme year, EDI goals and objectives, including ways to achieve a diverse and inclusive board of trustees.
- Reviewing and assessing regularly the diversity of trustees’ life experiences, expertise and skills.
- Encouraging sponsoring employers to consider widening the pool of candidates for trustees beyond senior management positions.
- Considering fixed terms for member-nominated trustee positions to encourage a scheduled change and bringing new perspectives to the group’s decision making.
The guidance also adds that trustees finding it challenging to address diversity gaps through member-nominated and employer-nominated trustee positions could consider an independent or professional trustee position.
TPR says it encourages any employer or trustees considering replacing the trustees with a sole trustee, to make sure that EDI is considered as part of that decision-making process.
A section has been added to the guidance on communicating and reporting for defined contribution schemes, ensuring it considers the range of backgrounds, needs and vulnerabilities of savers and that it is checked for bias and avoiding inclusion of stereotypes.
Trustees are reminded they have legal duties to ensure their communications are accessible for disabled people.
Louise Davey, TPR’s Director of Regulatory Policy, Analysis and Advice, said: “All savers deserve to be in a well-run pension scheme that makes decisions in their best interests and harnessing diverse views can help pension scheme trustees weigh issues in more detail and openly consider aspects important to those impacted by their decisions.
“This enables all those involved to better understand and mitigate scheme risks, avoid unintended consequences, and learn from what is working and what is not,” she continued, adding “While we recognise different scheme types, sizes and sectors may face different challenges, we believe there are some quick and easy steps that can and should be taken to improve schemes’ EDI now.”
MHM’s view
At MHM, we assessed our own team after the publication of the EDI guidance and we feel we are fully engaged and up to speed with the requirements of EDI legislation.
It is also our view that the publication of the TPR guidance is entirely right in order to ensure we all continue to reflect changes – and progress – in society.
From a purely professional standpoint, MHM has two observations; the first is that our industry can often require a level of knowledge and understanding that comes, in truth, with age and experience.
Together in our office, we offer clients more than 100 years of combined wisdom regarding pension management and trusteeship. Like most small firms, there are no doubt areas where we could improve, but our team represents a range of skills, experience and opinions, which we would be happy to share with anyone considering appointing a professional trustee.
The second is purely practical in that the smaller the number of people on the trustees, the harder it might be to achieve the ideal EDI scenario. Our own answer to that is that one should never ever stop trying.
If you are considering the EDI options for your trustee board, please contact us to discuss how we could help.
Contact Paul Wilson on 07768 030365 or by email to paul.wilson@mhmtrustees.co.uk
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