3 practical tips for embedding D&I thinking into trustee boards and pension governance committees

Not taking D&I seriously can damage your pension scheme’s reputation

One of the challenges with diversity and inclusion (D&I) is knowing where to start. We help pension trustees and sponsoring employers understand D&I in the context of their pension scheme, trustee board and members and take proportionate, sensible actions

But the benefits of having a diverse trustee board or pension governance committee are clear.

They include:

• Strong, balanced skill sets
• Better collective decision making
• Better member engagement/scheme take-up
• Cognitive diversity, creating constructive conversations
• Environmental, social and governance (ESG) compliance is more complete
• Greater appeal for a wider group of talented people to get involved

The risks of not taking D&I seriously can damage your pension scheme’s reputation. It can stop you from achieving the best for members, resulting in them thinking the scheme doesn’t reflect them, or good talent going elsewhere.

Here are our three practical tips to help trustee boards and pension governance committees with D&I:

1. Ensure your scheme governance structure is up to date

• Add D&I to your risk register, annual business plan and trustee training programme. Unconscious bias training is a great place to start and engage your trustees/committee members with D&I thinking.

• Review your trustee board or governance committee effectiveness each year with an independent adviser and consider if you have the right mix of skills and perspectives for your scheme.

• Ensure your trustee/committee member selection process is accessible for all of your workforce and membership. The job description should highlight the importance of a breadth of skills and viewpoints and that no experience is necessary because training is provided. (To find out more, take a look at our blog on ‘recruiting’ to these roles.

•Ask your advisers about their approach to D&I - are you getting the best advice from a wide source of views?

2. Increase focus on the ‘S’ in ESG

•Ensure your statement of investment principles is to up to date and considers the ‘social’ aspect of ESG investments.

• Think about stewardship data - ask your investment adviser how they can evidence social governance matters, including D&I.

3. Maximise member engagement to increase their expectations

• Create a clear statement or policy on your scheme’s D&I views and publish this for your members to see, eg in newsletters, the report and accounts, on the scheme website.

• Review the language in your communications - check they’re in line with best practice and reflect the diversity of your scheme’s membership. The reality is many pension scheme communications are overly technical and formal to be either interesting or helpful for members.

• Make sure they are accessible to all – could you do more for those with an impairment eg braille, large print, audio versions?

We have created tools, supporting documents (eg sample trustee D&I policies) and training to support pension schemes. They help bring D&I thinking into the trustee board/governance committee effectiveness process, but a valuable early step is to have an independent board effectiveness review.

Interactive workshops in person or online to discuss what D&I means for a pension scheme and look at cognitive and hidden diversity (eg, sexual orientation, religion and life experiences) really help your trustee board or governance committee see if it has the right mix of skills to run it effectively for all members.

The trustee of a leading £1.5bn pension scheme felt our D&I trustee training was a “quality session that opened up an important subject” and an “interesting challenge that the concept of ‘being on a board’ might itself be off putting to a more diverse universe of potential trustees”.

So if you want to lead the way and have a more diverse and inclusive board or pension governance committee, visit www.psgovernance.com/governance/diversity-inclusion, download our D&I guide or email us to see if PSGS can help.