The Pensions Regulator will create guidance on equality, diversity and inclusion for trustees and employers by the end of the 2022-23 financial year and clarify its expectations in the planned single code of practice, after it found a “worrying” lack of engagement on the topic. 

 

The regulator has published an action plan on Tuesday following collaboration with an industry working group since January 2021. The plan sets out how TPR intends to address the lack of diversity on trustee boards through “behavioural change”. 

 

It comes after new research commissioned by TPR found few schemes record diversity data, either because trustees had not thought about it (41% of DB, 30% of DC schemes) or did not believe there was a need to do so (35% of DB, 43% of DC schemes). Three-quarters (74%) of DB schemes that did not capture data also had no plans to do so in future.  

 

Among those who did collect data, many monitor the figures without taking any action on the back of them, with two-fifths (40%) of DB schemes and nearly half (47%) of DC schemes that collected data not identifying any uses for it.
   

      

 

TPR's executive director of regulatory policy, analysis and advice, David Fairs, said the findings show 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,” he said. 

 

TPR wants trustee boards to have a wide range of perspectives, knowledge and skills, where everyone has the opportunity to contribute and challenge from different perspectives, Fairs added. 

 

The regulator found, however, that feedback on its single modular code of practice consultation showed industry would welcome clear expectations on ED&I to be included in this. “We intend to clarify our expectations in the forthcoming new code of practice,” it said, noting that the main barriers to greater action on ED&I were found in recruitment, engagement and resource, and a lack of understanding of why ED&I on boards is important.  

 

“This indicates that there is a need for support to understand the benefits of ED&I, and how to adopt different recruitment approaches to increase the pool of potential candidates,” TPR noted in its action plan. 

 

As well as clarifying expectations in the single code, the regulator therefore plans to publish ED&I guidance by the end of 2022-23 to help address: 

 

 

TPR’s existing guidance and templates will then be reviewed to see if any further changes need to be made. 

 

The Pensions and Lifetime Savings Association collected data on trustee gender and age diversity in 2016, finding that 83% of trustees were male, with a quarter of boards all-male, and a third were over 60. mallowstreet Insights is in the process of building its first regular DEI survey together with investment firm Cardano. The findings will be available later this year. 

 

 

TPR believes there is currently a lack of data on trustee ED&I. It said it wants to “explore options” to develop a mechanism for collecting data over time, proposing that this could be in the form of an all-trustee survey at regular intervals, for example triennially, or by adding questions to the scheme return or service for reporting data; alternatively it could also track progress via existing annual surveys. The regulator plans to test some approaches and, by the end of 2023-24, decide on a suitable way to collect data for measuring progress. 

 

During next year, supervision teams will also engage with trustees on the topic “to learn, build our experience, and continue to evolve our thinking to better support governing bodies”.