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Is your DC pension arrangement, inclusive and equitable to all?

By Helen Gilchrist and Natasha Rogers | January 10, 2022

We explore how employers and trustees can take the necessary steps to ensure their defined contribution (DC) pension arrangement is inclusive and equitable to all.
Pension Board and Trustee Consulting|Pensions Corporate Consulting|Pensions Risk Solutions|Pensions Technology|Inclusion-and-Diversity

Inclusion. Diversity. Equity. We’re not unfamiliar with these words but events over the past 18 months mean they’ve taken the spotlight. Society’s views have shifted dramatically, with the intent being on ensuring everyone has equal opportunities and that individuals aren’t discriminated against because of their differences.

Organisations have embraced inclusion and diversity (I&D) because they understand the simple fact that employing individuals from different backgrounds gives them the diversity of skills, perspectives, and thoughts they need to perform better.

An important retention tool for attracting and retaining diverse talent is providing inclusive benefits, including the pension benefits offered, and employers need to take action to ensure this is the case.

The pensions industry has been relatively passive in considering how I&D should be incorporated into pensions but thankfully, this is changing rapidly. The Pensions Regulator has stated that “Diversity and inclusion is too vital to good member outcomes for it just to be 'desirable'. It must be embedded in an organisation’s behaviours if member outcomes are to be improved.”

The Pensions Regulator has stated that “Diversity and inclusion is too vital to good member outcomes for it just to be 'desirable'. It must be embedded in an organisation’s behaviours if member outcomes are to be improved.”

In understanding whether your pension arrangement is inclusive and diverse, do you understand the needs of your diverse workforce? If so, how does your pension scheme meet these needs? Are all employee groups being treated fairly?

So how do we help employers and fiduciaries provide inclusive and equitable DC pensions?

  1. 01

    By acknowledging that DC pensions make up only a part of an employee’s financial wellbeing

    The last 18 months has reminded us that for many, planning for something as distant as retirement is impossible when faced with immediate, short term financial worries. It’s caused many employers to question who current benefit programmes are designed for and which employees’ needs are not being met by the status quo.

    Our recent Financial Wellbeing Survey suggests that 60% of employers are looking to build on/enhance their financial wellbeing proposition as a result of I&D concerns.

    of employers say that the key reason for a focus on financial wellbeing is as a result of I&D concerns
  2. 02

    By helping employers and fiduciaries spot issues - the crucial role of data!

    Looking at the key membership information of your DC pension scheme can shine a light on how inclusive it is.

    For example, what outcomes are members expected to get at retirement? How does this differ if you segment the population i.e. females vs. males. Whilst many organisations need to publish results on their gender pay gap, how much attention is given to the gender pensions gap? Noting the inequality between gender in terms of pay, this magnifies when it comes to retirement savings.

    Data can be used to understand what actions your members are taking. For example, are all members taking up matching contribution rates or is this largely dominated by higher paid employees and those who can afford it? What fund options are members invested in and do the investment options actually cater for the differing needs of members?

    Data will be the key to understanding whether any aspects of your DC scheme is not inclusive to all. Once we identify the issues, we can formulate the solution, whether that be plan design, communications or investment governance.

  3. 03

    By advocating for diversity amongst those that oversee pensions

    Does your oversight committee or trustee board reflect the diversity of your membership? What characteristics and skills are missing? Assembling a committee or trustee board with different perspectives and backgrounds helps to ensure the pension scheme better meets the differing needs of its members.

    Our recent Trustee Governance Survey, featured in our Good Governance Guide showed that only 3 in 10 trustees think their board is sufficiently diverse, but only circa 20% plan to do something about it.

    of trustees think their board is sufficiently diverse

    We can help oversight committees and trustee board assess their skills and competencies in order to understand what is missing.

  4. 04

    By overhauling communications so that they ‘speak’ to all

    How can we better engage members on the importance of saving, whether that be for the short-, medium-, or long-term? Not everyone is going to respond in the same way to the same message.

    Segmentation and understanding your audience is crucial. The use of imagery, tone, digital versus traditional paper communications, can all help increase engagement.

    The message should change depending on where members are in their savings journey. For younger employees, the focus could be on starting to save for the longer term. For older members, the focus will be on retirement, the options they have and making sure they have all the support required to make appropriate decisions.

  5. 05

    By revisiting plan design

    I&D runs through all aspects of plan design, from looking at those eligible for the pension scheme, understanding whether the contribution rates are fair and equitable, reviewing the retirement outcomes for different groups, through to what wider savings options are available. Do you have different contribution levels/plans for different groups of employees? If so – how inclusive is this? Do all employees have access to alternative savings vehicles or is this limited to ‘high earners’ only – how fair and equitable is this? Employees have differing financial priorities and this needs to be catered for in a modern benefit programme.

  6. 06

    By scrutinising investments

    Do we have the right options to meet the differing needs of the membership? Do we understand what investment options members actually want? There has been a real focus on providing investment solutions that take into account ESG considerations. We can help understand the actual needs and wants of your membership so you can ensure the right investment options are provided.

Our 2021 FTSE 350 DC Pension Scheme Survey shows over 60% of employers want to improve retirement outcomes for employees. But the answer goes beyond simply making more available to those that can afford it. It’s about building financial security now, so that planning for the future is possible. It’s about the flexibility and choice that today’s workforce demands and it’s about spending your money wisely, in the most inclusive way, to motivate and retain your best, diverse talent.

Now more than ever, one size does not fit all and we’re here to help.


Helen Gilchrist
Head of DC Consulting, GB
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Natasha Rogers
Director, Retirement
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