Pinpointing the pensions industry in the road to diversity
19th February 2024
The pensions industry is at a point of near consensus that increasing equality, diversity and inclusion (EDI) representation on scheme boards, and the professional trustee firms that work with them, is a good thing. Leading to significant improvements both for scheme governance, but also recruitment and retention within the industry.
Improving strategy hand in hand with progress
The last 12 months have seen enormous progress when it comes to EDI initiatives. Looking specifically at pension trustee boards, our recent research found that 46% now have an EDI strategy in place, up from 26% a year ago. A positive step in the right direction. Similarly, last year a quarter of trustees promised to set a strategy within three years, and just a year later the majority of these trustees now have one in place. If the 20% of trustees that have promised to set an EDI strategy this year follow suit, then the industry will have made real progress.
Looking specifically at pension trustee boards, our recent research found that 46% now have an EDI strategy in place, up from 26% a year ago.
Larger schemes are making waves, but smaller schemes cannot be left behind
Rapid success has been seen most significantly amongst the larger schemes, with 55% of schemes over £3 billion collecting board diversity statistics. These schemes have also reported having greater access to training, which not only helps to nurture the skillsets needed to identify and act to challenge existing homogeneity, but also increases awareness. This presents an opportunity for these larger schemes, and any professional trustees which work alongside them, to bring smaller schemes along on the journey and accelerate industry-wide progress.
Our research highlighted a concerning signal that there is still much to do. Medium sized schemes, where two in five with assets below £1 billion, are not currently planning on setting an EDI strategy. This can, and should be, resolved with knowledge sharing, building resources, and focused training, but the industry must establish whether the lack of strategy at this level is because it is too hard to implement or because it isn’t deemed important.
Equality, Diversity and Inclusion (EDI) report 2023
120 UK pension professionals were surveyed throughout August and September to understand how EDI considerations feature in decision-making, the challenges encountered and where improvements can be made. In partnership with mallowstreet, we are pleased to present the findings in this new report.
Thankfully, there is a range of EDI training readily available for pension schemes and professional trustees. Already, 55% of schemes with assets over £3 billion have reported that they have reviewed The Pensions Regulator’s guidance on updating member communications and amending recruitment practices. These larger schemes are also more likely to take part in EDI training hosted by external consultants (82%), in contrast to a little over half (52%) of those schemes with assets under £1 billion.
Attracting talent from all backgrounds remains a challenge
Two areas where we are seeing greater representation are gender and social inclusivity. Trustees who attended state schools remain well represented, with nearly half (46%) of all those surveyed working on schemes where the vast majority (80%) attended a state school. Representation of women has also improved, with 21% of schemes having boards made up of 40% women.
However, trustees still report that recruiting for the future from a diverse pool of candidates remains a core challenge. Almost half (46%) of pension professionals believe this is the primary barrier to a diverse workforce.
Areas where trustees report the least progress being made includes recruitment among neurodivergent people, people from diverse ethnic and cultural backgrounds, and people with disabilities.
Areas where trustees report the least progress being made includes recruitment among neurodivergent people, people from diverse ethnic and cultural backgrounds, and people with disabilities. Tangible EDI progress can only be made when coupled with increased representation from the full spectrum of society, at least to the extent that scheme boards are representative of their membership.
Despite this, the industry is heading in the right direction, with advisors and trustees actively involved in bringing about positive change. We remain hopeful that further improvement is on the horizon. The trends we are seeing are indicative of a future industry that will be more equal, diverse, and inclusive.
Success will come from a combination of grassroots initiatives with additional guidance from policymakers, as well as professional trustee firms setting out a best practice approach. Together these will encourage a trickle-down effect which transforms the industry for the better.
