Six steps to bring diversity, equity & inclusion to life for your pension scheme
At PSGS we want to be a leader in the pension industry in the move to greater DEI. We have a dedicated internal workstream looking at how we can drive continuous improvement in three key areas:
- How we live these values as a business, ensuring talent can thrive no matter their background.
- How we can support our pension scheme clients to understand what gaps there are in their scheme and the way it’s managed, and how things can be improved.
- How we can help the wider industry and society to eradicate inequality.
Today I’m focusing on what we can do to help pensions managers and trustees put DEI into practice. Before I start, it’s worth thinking about the “why?”. If you haven’t done so already, the excellent PLSA guidance on DEI in pensions is worth a read.
It’s quite clear that greater diversity in background and cognitive thinking among decision makers leads to more profitability and sustainability. It is also apparent that no action means falling behind an accelerating curve – pension schemes that do nothing could be open to criticism and reputational risk. It’s also just the right thing to do!
If you want to move forward with DEI and your pension scheme, here are some ways to start:
1. Get comfortable being uncomfortable. Don’t assume just because there are no complaints there is nothing to attend to. Add DEI to your scheme’s risk register. Challenge yourself to do a trustee effectiveness and succession review to understand the skills and experience you have and those you actually need. Ideally use an independent resource to get some hard facts on what works and what needs improving, and ensure the criteria of what makes a balanced trustee board is stress-tested. Acknowledging to members there is something to look at is important, as well as asking for their opinions and views. Without those honest appraisals everything you do risks just being lip service and hollow.
2. Speak to your pension scheme sponsor. Ask your sponsor what they’re doing in the space of DEI and what support for training/resource is available that you could leverage in the running of your scheme. Hopefully, this is something already in traction with the sponsor.
3. Review your communications. Consider how you communicate with your pension scheme members. Some may be company employees if they are active members, others will work elsewhere and/or have retired. They could live anywhere, be all sorts of ages and have all sorts of backgrounds. Think membership, think diversity! For example, if you are seeking member nominated trustees, are you reaching all corners of your membership effectively? Can members with disabilities easily access your published materials? Is the language and imagery used appropriate? Are you really catering for all?
4. Challenge your unconscious bias. Everyone has their biases and, in a trustee board, it can extend out to ‘groupthink’. Seek some training to start to unpack what has been engrained. Listen to your colleagues’ experiences and don’t be afraid to ask questions, or of saying the wrong thing. If you are open to listening and adapting going forward it will lead to something positive over time.
5. Environmental, social and governance (ESG). ESG for pension schemes has built tremendous momentum in the last five years with most schemes’ statement of investment principles (SIP) and implementation statements reflecting this. However, the focus has largely been on environmental aspects – we now need to really start working on the social element. Part of this is setting out aims in the SIP and ensuring investment managers are using voting rights to influence those companies with a strong DEI focus (and vote against those who do not) and to reflect this in the trustees’ annual implementation statement.
6. Be an ally. Get actively involved with industry groups and forums, such as the Diversity Project. Could you provide mentoring opportunities to future lay trustees? Or link up with local schools and charities to provide access into an industry that still has much to do when it comes to DEI?
Trustees and pensions managers should be considering their pension scheme policy on DEI to improve decision making and reduce reputational risk. However, to avoid the discussions being merely noble aspirations real actions are required to lead to real change.
The author is Simon Lewis, client director at Punter Southall Governance Services.
This article is provided by Punter Southall Governance Services.
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