The UK’s Pensions and Lifetime Savings Association (PLSA) has joined forces with law firm Travers Smith to create the very first diversity and inclusion (D&I) guide for the pension industry.
The Diversity & Inclusion Made Simple guidebook sets out the first step trustees should take when thinking about diversity within their pension schemes; from what it actually means, to what the benefits are and how to practically promote greater inclusion.
“There is no ‘one-size-fits-all’ solution to diversity issues, but this guide intends to prompt discussion about how best to achieve greater D&I and the advantages of doing so for all pension scheme stakeholders,” the PLSA said.
“Armed with a greater understanding of these issues, pension schemes should be encouraged, and better equipped, to deliver D&I objectives.
“D&I issues are constantly evolving to reflect changes in our society and trustee boards are encouraged to regularly review and refresh their approach to D&I to ensure they remain up to speed with best practice.
“Although some pension scheme stakeholders have made great strides in recent years, diversity and inclusion are areas which may be relatively new and unfamiliar to readers,” it added.
And, as always, awareness is the first step towards positive change and cultural shifts within any organisation, body or industry.
Daniel Gerring, partner and head of pensions at Travers Smith, said: “The benefits of diversity and inclusion in decision-making are now well established, so there is much for trustees and the rest of the pensions industry to gain from taking on board these simple concepts and measures.”
Diversify the industry
Caroline Escott, policy lead for investment and stewardship at the PLSA, told International Adviser: “There’s a growing body of evidence that cognitively diverse boards make good decisions, avoiding behavioural biases such as groupthink.
“Pension scheme investors have long made it clear they expect to see more diverse boards and management teams running the companies they invest in – so if this makes sense for companies, it also makes sense for schemes.
“We’ve also seen growing scrutiny from The Pensions Regulator on trustee board diversity through their recent Future of Trusteeship initiative.”
Escott noted, however, that industry figures don’t really show a diverse sector, with the average trustee being in their mid-50s and 83% of boards being male.
She continued: “It therefore seems clear that schemes are lagging behind the FTSE 100 and the investment industry generally on diversity.”
Start from recruitment
Considering the statistics, the pension industry can and should do better, Escott added.
“Trustee boards don’t need to wait for the next vacancy to arise but should start now by creating a formal board diversity policy, asking their advisers and service providers about their approaches to D&I and providing training for trustee boards on the issue.
“In the longer term, they should also ensure that any selection and appraisal processes use gender-neutral and inclusive language and focus on skills instead of CVs.
“The role of the chair is particularly vital to work to create an environment which is as inclusive as possible so that diverse candidates are retained, and the board works effectively to make decisions.
“Despite growing industry awareness of the need to support diverse groups, the UK still has significant gender, ethnicity and LGBTQ pension gaps.
“Although there are a number of deep-rooted issues underlying this, the PLSA believes that more diverse trustee boards are a necessary step, so that they can better reflect and respond to diverse savers’ needs,” she added.
Challenge the conventional
To understand what impact D&I can have on firms as well as the wider financial services, International Adviser reached out to companies specialising in diversity and inclusion activism and in financial advice to diverse client bases.
“This guide will help broaden thinking on diversity and inclusion within the pensions industry,” said Matt Cameron, managing director of industry representative organisation LGBT Great.
“The guide will provide a platform to ask questions and challenge conventional talent management practices. The real trick will be taking the best practice guidelines laid out in this report and converting this into tangible action which is a key challenge within the industry.”
Behavioural biases have to be tackled first, said Dawn Gale, managing director of Attitude Financial Services, an advisory firm catering for LBGT+ clients, which is also part of the Quilter Financial Planning network.
“Firms which take diversity and inclusion seriously foster a more engaged workforce who are better equipped to drive positive results. Employees also benefit from being able to bring their whole self to work without the fear of being treated differently and won’t need to compartmentalise their private and personal lives.
“In the future, we hope that these kinds of guides become obsolete because diversity and inclusion is simply the norm and people no longer need to be guided to do what’s right.
“Until then though, this is a fantastic way to help the financial services industry tackle behavioural biases and push the industry to be better,” she added.
International Adviser’s parent company Last Word Media is the exclusive industry media partner of LGBT Great, a financial services representative organisation focusing on diversity and inclusion.