On 28 March, The Pensions Regulator (TPR) published two sets of practical guidance – one aimed at trustees and the other at employers – to help improve equality, diversity and inclusion (EDI) in Trustee Boards. It has also published an overview which explains what EDI is and why it is important for schemes, as well as an example trustee recruitment leaflet and a template advertisement for trustee candidates.
TPR suggests a good starting point for schemes is to establish EDI principles, which can later be developed into a scheme-specific EDI policy (covering an agreed EDI definition, aims and objectives of the Trustee Board and a training plan). The Board can then fully integrate its policy into the operation of the scheme – for example, testing policies, procedures, governing documents and communications against their agreed EDI definition and aligning the scheme’s policy with that of the employer. TPR expects the Chair to take a lead role in tracking and recording the Board’s EDI progress.
Trustees are encouraged to assess their Board’s diversity of ‘characteristics, life experience, expertise and skills’ to identify any gaps and to repeat this assessment regularly. TPR expects the Chair to establish a clear succession plan and update it regularly to reflect the importance of EDI. A clear and robust process must also be in place for the appointment of the Chair and TPR highlights some of the skills that a Chair should possess in order to encourage an open and inclusive culture.
Where Trustee Boards struggle to fill their diversity gaps through member and employer-nominated trustees, TPR suggests that they could consider independent or professional trustee appointments to improve diversity (but ensuring that EDI is at the forefront of any decision to replace a Trustee Board with a sole trustee).
As for member-nominated trustee procedures, TPR believes that many schemes could be missing out on suitable candidates by excluding deferred members and that, in practice, any concerns about conflicts of interest could be addressed during selection interviews, or through a conflicts policy and confidentiality agreements. Trustee Boards should review their procedures (considering for example the diversity of their selection panel and their communications about the role of trustees) to consider whether they may be deterring candidates from putting themselves forward for the role. TPR indicates that remunerating trustees could extend the pool of candidates.
While fixed-term appointments promote regular turnover and bring fresh perspectives to the Board, schemes should consider a staggered approach to maintain scheme-specific expertise on the Board.
Employers are encouraged to look beyond senior management when considering candidates for the Trustee Board and the Chair is expected to play a key role in engaging with the employer and any employer-nominated trustee appointments to support diversity on the Trustee Board.
TPR expects any performance assessments of individual trustees, the Trustee Board as a whole and the scheme’s advisers to consider whether EDI has been, and continues to be, integrated effectively into the scheme’s processes. In doing so, trustees should set scheme-specific EDI goals at the start of each scheme year.
TPR also highlights the requirements of the Equality Act 2010 and the need to make ‘reasonable adjustments’ for candidates and existing trustees with disabilities, such as conducting off-site interviews as part of the selection process.
Finally, a new section has been added to TPR’s existing communicating and reporting guidance to encourage trustees of defined contribution schemes to consider the diversity and vulnerability of their membership, checking for bias and avoiding the inclusion of stereotypes in any communications.
