THE Pensions Regulator (TPR) has released a new action plan to enhance diversity and inclusion across trustee boards, after “worrying” new statistics revealed that trustees are not prioritising this area.
New action plan outlines the efforts TPR will take in collaboration with the Diversity and Inclusion Industry Working Group (IWG) to motivate and assist trustees in hiring diverse candidates and fostering an inclusive workplace.
TPR aims at trustees of occupational pension schemes, and work conducted by the data, research, and innovation subgroup indicates that there is limited data available on the diversity of trustee boards in the UK.
It outlines how TPR will provide practical tools and information on hiring diverse candidates, fostering, and maintaining an inclusive culture, engaging employers on diversity, and making sure communications to pension scheme savers are inclusive. It also outlines how TPR will set trustees’ clear expectations on diversity.
Enhancing diversity and inclusion on trustee boards is crucial for efficient decision-making so that all depositors receive fair value for their money, as stated in TPR’s Corporate Strategy. Meanwhile, alarming results from fresh data released by TPR today suggest that not enough trustees are giving diversity a high priority.
According to the regulator’s “concerning” analysis, only 10 per cent of defined benefit (DB)* and 14 per cent of defined contribute (DC)** on schemes record any trustee diversity data.
However, DC schemes typically gathered a wider range of data in addition to this, with between 8 and 10 per cent of DC schemes collecting gender identity, sexual orientation, disability, ethnicity, religion, and educational attainment, compared to 5 per cent of DB schemes. Both DB and DC schemes were more likely to record trustee gender and age.
But according to TPR, over half (47 per cent) of DC schemes and two-fifths (40 per cent) of DB schemes did not identify any uses for the trustee diversity data that they had collected. This suggests that the data may not be being used to its full potential.
David Fairs, executive director of Regulatory Policy Analysis and Advice, said: “Our research shows that trustees have a long way to go towards embracing the importance of diversity and inclusion. The status quo is not acceptable.
“Trustee boards that are not diverse, risk knowledge gaps, entrenched ideas, biased thinking, and poor decision making which puts savers at a disadvantage.
“We want to see trustee boards with a wide range of perspectives, knowledge, and skills and where everyone has the opportunity to contribute and challenge from different perspectives.
“We have worked closely with the industry working group to develop this action plan. It sets out clear steps TPR together with the industry will take to help trustees bring about the change that is clearly needed.”
As part of the strategy, the regulator will outline “clear” expectations regarding diversity in its upcoming Single Code of Practice. Additionally, the regulator will collaborate with the IWG to publish guidance that will assist trustees in understanding and upholding these expectations. This guidance will be released “at the end of this year or in early 2023.”
The Pensions Regulator (TPR) is the UK regulator of workplace pension schemes. They make sure that employers put their staff into a pension scheme and pay money into it.
*Defined Benefit (DB) plans provide a fixed, pre-established benefit for employees at retirement.
**Defined Contribution (DC) schemes are occupational pension schemes where employees’ own contributions and employer’s contributions are both invested, and the proceeds are used to buy a pension and/or other benefits at retirement.
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