A welcome addition to the Pensions Regulator’s General Code, published on 10 January 2024, is the introduction of high-level diversity and inclusion expectations for trustee boards, having already published detailed practical guidance in March 2023.
The General Code states that schemes should conduct regular reviews of the trustee board to ensure there is a “diverse spread of members with varied technical skills and experiences” and that it’s good practice for Member Nominated Trustee (MNT) arrangements to be designed to support applicants “representing the diversity of the scheme’s population”.
However, our 2023 governance survey showed that around three quarters of schemes are finding it harder to recruit new trustees. Add to that the challenge of recruiting for the attributes most likely to complement the existing board, and the challenge increases.
“A trustee board embedding true diversity of background, experience and approach creates a strong bedrock for good governance and high-quality decision making.”
Jenny Gibbons | Head of Pensions Governance
Whilst there’s no ‘silver bullet’, there are a huge number of small changes, improvements and tweaks to trustee recruitment that can make the difference between just one or two individuals to choose from, or true choice between high quality and diverse candidates who will add value to the existing team:
It’s impossible to know what new attributes your board need without first considering how diverse it currently is.
When we think about board diversity, our focus often turns to diversity that’s easy to see or identify, such as ethnicity, gender or age.
However, a useful mental device for us all to keep coming back to for greater clarity and breadth is to always consider three lenses of diversity:
They are each important, and vary in terms of how visible they are, how they’re measured and how ‘gaps’ are mitigated. And they’re non-correlated, so solving one doesn’t automatically mean you’ve solved the others. Our previous article, Does TPR have equality, diversity and inclusion covered?, provides more information on these different lenses of diversity and how they can be measured.
A trustee board embedding true diversity of background, experience and approach creates a strong bedrock for good governance and high-quality decision making.
Though trustee recruitment is by no means the only way of mitigating for diversity gaps on a Board, it is an important lever and one TPR places particular emphasis on. Following the publication of TPR’s EDI guidance, and due to the challenge of finding new MNT’s, we’ve worked with several trustee boards to review their MNT arrangements.
The adjustments we’ve helped boards make have had a positive and inclusive impact and include changes such as focussing on selection not election, widening the candidate pool, using blind CVs and using objective selection criteria.
How you communicate can make or break your recruitment process. This is your opportunity to showcase the role and attract a diverse range of candidates to choose from.
As a guiding principle, you must let members know that the role may well need “someone like them”, with their own unique blend of background, life and work experiences, and perspective. Using inclusive language and ensuring communications are simple and accessible, will help encourage a more diverse range of applicants.
Additionally, its key to highlight that applicants don’t need to have extensive knowledge of pension matters as they will receive training and guidance on the job. This way you will not miss the opportunity of appointing individuals that are eager to learn, passionate about how their pension scheme is run and not afraid to share different viewpoints on topics.
Many schemes wait until they have a role to fill before starting their recruitment process. However, putting in place an effective and ongoing succession plan will remove barriers to people wanting to become, and remain, trustees.
This includes practical steps such as providing an opportunity for potential candidates to learn about the role and engaging with managers and leaders at the employer to raise awareness of the role and the value it can add to employees’ personal and career development.
Becoming a trustee can be a daunting process, with lots of unknowns. There’s a statutory requirement for trustees to have the necessary knowledge and understanding to fulfil their duties. But it’s not simply about ticking a box. A knowledgeable and empowered trustee is better equipped to challenge advice and make more informed, efficient and effective decisions. Importantly, they are also more likely to enjoy their role, feel that they are ‘adding value’ and therefore remain in the role for their full tenure.
We can help you assess what your trustees know now and develop a plan to fill any knowledge gaps, in line with TPR’s expectations.
To learn more about any of the topics raised in this article and how we can support your MNT recruitment process, please visit our Pension Board and Trustee Consulting web page, contact your WTW contact or one of our team of specialists below.
