Pensions - Articles - Pension boards lack diversity but not the desire to improve

 Completed by 2,197 trustees, making it TPR’s largest-ever survey, the results will provide a baseline to measure progress towards ensuring high standards of diversity and inclusion on pension boards.

 The results highlighted industry recognition of the importance of inclusive and diverse boards with 78% saying they felt a diverse trustee board was important. There was also broad consensus that diverse and inclusive pension boards are important for good decision-making (84%), good governance (83%) and good member outcomes (85%).

 While the survey highlights the lack of trustee diversity in terms of protected or visible characteristics such as ethnicity, most trustee boards were seen as diverse in terms of skills (82%), life experience (74%), professional background (73%), cognitive diversity (73%) and education (61%).

 Louise Davey, TPR’s Interim Director of Regulatory Policy, Analysis and Advice, said: “Growing evidence shows diverse and inclusive boards make more effective decisions, which is key to good governance and improving saver outcomes.

 “While the profile of the ‘typical’ trustee is unlikely to be a surprise, this survey has supplied important baseline data we can use to measure progress towards more diverse and inclusive scheme boards.

 “It also shows the majority of trustees recognise the importance of greater board inclusivity and diversity, although fewer than half of schemes have taken action to improve.

 “We want trustees to think about diversity more widely than just through more visible characteristics and consider their boards’ skills, life experience and cognitive diversity as well.

 “Those wanting to improve their scheme’s board should take advantage of our latest guidance, which provides practical ways to improve board diversity and inclusion.”

 The results
 According to results of a TPR survey, the 'typical' trustee is:

 a man
 cisgender (a person whose gender identity aligns with the sex they were assigned at birth)
 heterosexual
 white
 over 45
 without a disability
 either of a Christian faith or has no religion

 More than half of trustees (53%) had all seven of these characteristics, the survey found.

 Trustee characteristics compared with UK census data
 

 The survey also found:

 around one-third of trustees were retired (31%) with the rest employed, self-employed or freelance
 more than one in 10 (11%) were born outside of the UK, with 3% reporting English as their second language
 3% said they were neurodivergent compared to an estimated 15% nationally
 newer trustees were more likely to have a positive attitude towards diversity and inclusion and women were more positive than men

 Despite being less diverse than the UK population, the survey found around half of those responding considered their board to be diverse in terms of gender (58%) and age (49%).

 Data collection
 About one-fifth of schemes (22%) collected data on the diversity of their trustees (in terms of protected characteristics). Where this was captured, it typically covered gender and age (both 20%).

 Comparatively few recorded data on gender reassignment, sexual orientation or religion (between 3% and 5% for each).

 Larger pension schemes showed greater engagement with diversity and inclusion, with micro schemes least likely to collect trustee diversity data. Micro schemes were also perceived to be less likely to view diversity (40%) and inclusion (47%) as important.

 Action
 One-third (34%) of schemes had acted to create a more diverse trustee board and/or planned to do so in the next 12 months. The same number (34%) had taken or planned action to encourage greater inclusivity.

 Overall, 43% had taken or planned action in either of these areas (with 25% doing both).

 The survey found professional and corporate trustees were associated with greater action on diversity and inclusion.

 For example, two-fifths of schemes with professional or corporate trustees had taken or planned action to create a more diverse board (41%) or encourage greater inclusivity (42%). This fell to 24% and 25% respectively among schemes with only non-professional trustees.

 Role of the chair
 Half of trustees (50%) felt the board’s chair played a key role in driving and promoting in D&I and 45% agreed the chair led progress in meeting D&I objectives.

 Importantly, TPR’s analysis of the survey results shows the primary predictor in a trustee board viewing diversity as important was whether there was a chair who drove and promoted D&I.

 The next most important predictor was those boards undertaking performance assessments, including how well D&I had been embedded.

 The size of the scheme and having a chair that drives and promotes D&I were the two most significant predictors of whether trustee boards were taking action on diversity.

 TPR’s researchers concluded there was a common theme that schemes with a chair who drives and promotes D&I were more likely to have diverse and inclusive trustee boards.

 Guidance published by TPR for pension schemes and employers includes ways chairs can support improvements in D&I, and advice on D&I-related considerations employer can consider when appointing a chair.

 Resources for schemes
 More than half (52%) of respondents said they were aware of TPR’s guidance on D&I. Fewer knew of other sources of guidance and two-thirds (64%) of schemes that had developed a D&I strategy or policy said it was influenced by TPR’s guidance.

 A similar proportion (49%) were aware of TPR’s D&I Action Plan. Awareness of TPR’s guidance was highest among professional trustees (78% vs 51% of corporate and 50% of non-professional trustees).

 TPR’s first trustee diversity and inclusion (D&I) survey