The Pensions Regulator (TPR) has today (Tuesday) published equality, diversity and inclusion (EDI) guidance for pension scheme governing bodies and employers.
TPR hopes the guidance, developed with an industry working group, will be used by pension scheme governing bodies and sponsoring employers to improve the EDI of their scheme’s board.
Louise Davey, TPR’s Director of Regulatory Policy, Analysis and Advice, said: “All savers deserve to be in a well-run pension scheme that makes decisions in their best interests."
“Harnessing diverse views can help pension scheme governing bodies weigh issues in more detail and openly consider aspects important to those impacted by their decisions."
“This enables all those involved to better understand and mitigate scheme risks, avoid unintended consequences, and learn from what is working and what is not.”
“Employers also have an important role in ensuring EDI is considered by their scheme. And they have a duty to support employees who are nominated to their scheme’s governing body. That’s why we’ve provided specific guidance for scheme employers."
“While we recognise different scheme types, sizes and sectors may face different challenges, we believe there are some quick and easy steps that can and should be taken to improve schemes’ EDI now.”
The role of the chair
The guidance provides pointers for chairs – explaining that the chair should play a key role in making boards more diverse and inclusive.
It also includes advice on some of the EDI-related considerations an employer will wish to consider when appointing a chair.
EDI policy and performance assessments
TPR’s guidance suggests pension schemes have an EDI policy, which covered an agreed definition of EDI, the EDI aims of the governing body and an EDI training plan.
Assessments of the governing body’s performance should include how well EDI has been, and continues to be, embedded into processes, according to scheme objectives.
The guidance suggests that EDI goals and objectives, including ways to achieve a diverse and inclusive governing body, should be agreed at the start of the scheme year.
Enhancing board diversity
Governing bodies should also regularly review and assess their body’s diversity of life experiences, expertise and skills, TPR said.
The guidance also encourages sponsoring employers to consider widening the pool of candidates for governing bodies beyond senior management positions.
It also highlights the value being a trustee can have on an employee’s personal and career development.
Fixed-term appointments
The guidance suggests governing bodies may wish to consider fixed terms, usually between three to five years, for member-nominated trustee positions to encourage a scheduled change to the trustee board bringing new perspectives to the group’s decision making.
Where there is a professional trustee, the guidance reminds it is possible for governing bodies to change the individual representative from the firm over time to support their board’s diversity.
The guidance also adds that governing bodies finding it challenging to address diversity gaps through member-nominated and employer-nominated trustee positions could consider an independent or professional trustee position.
TPR also says it encourages any employer or governing body considering replacing the governing body with a sole trustee, to make sure that EDI is considered as part of that decision-making process.
Reasonable adjustments
TPR highlight the existing legal duties of Governing bodies under the Equality Act 2020, to make reasonable adjustments for candidates and existing trustees with disabilities for example, to premises, equipment and technology or the role itself.
Reasonable adjustments may also need to be considered as part of the trustee selection process, for example, access to interviews remotely or providing braille or large-print documents in advance, TPR’s guidance said.
Inclusive communications
TPR has added a section on inclusive communications to its guidance on communicating and reporting for defined contribution schemes.
The updates aim to help ensure scheme communications consider the diverse range of backgrounds, needs and vulnerabilities of their savers.
All communications, the update advises, should be checked for bias and to ensure they avoid inclusion of stereotypes.
Governing bodies and trustees are reminded they have legal duties to ensure their communications are accessible for disabled people.
Notes to editors
- The term governing body includes trustees and directors (where the trustee is a company) of occupational defined contribution (DC) schemes, master trusts, defined benefit (DB) and hybrid pension schemes, as well as scheme managers and pension board members of public service pension schemes (board members). When describing trustees, TPR mean this to also include scheme managers and pension board members of public service pension scheme and directors of trustee companies where the trustee is a company.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are:
- to protect members’ benefits
- to reduce the risk of calls on the Pension Protection Fund
- to promote, and to improve understanding of, the good administration of work-based pension schemes
- to maximise employer compliance with automatic enrolment duties
- to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)
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