U.K. Regulator Says Pension Trustees Are Not Prioritizing Diversity, Inclusion

The Pensions Regulator, the U.K.’s workplace pension watchdog, said that “worrying” new research shows that pension trustees are not prioritizing equity, diversity and inclusion on their boards, and published an action plan intended to help change that.

The plan outlines steps the regulator said it will take to encourage and support pension plan trustees to recruit diverse candidates and create a culture of inclusion. It also explains how TPR will establish clear expectations for trustees on diversity and provide them with tools and information on recruiting diverse candidates, creating and maintaining an inclusive culture, engaging with employers on diversity, and ensuring that communications to participants are inclusive.

TPR says that acquiring good data on pension plan diversity is essential to improving diversity and inclusion; however, it found that U.K. pension plans are not collecting the data they need. It said that only 10% of defined benefit plans and 14% of defined contribution plans were collecting trustee diversity data. Additionally, among those who were collecting data, nearly 40% of defined benefit plans and nearly half of defined contribution plans said that they had no plans to use the information.

Among the plans that were not recording trustee diversity data, 41% of defined benefit plans and 30% of defined contribution plans said they had not thought about collecting it, while 35% of defined benefit plans and 43% of defined contribution plans said they felt there was no need to collect the information at all.

“Our research shows that trustees have a long way to go towards embracing the importance of diversity and inclusion. The status quo is not acceptable,” David Fairs, TPR’s executive director of regulatory policy analysis and advice, said in a statement. “Trustee boards that are not diverse risk knowledge gaps, entrenched ideas, biased thinking and poor decision-making, which puts savers at a disadvantage.”

Fairs added that TPR wants to “see trustee boards with a wide range of perspectives, knowledge and skills.”

TPR said the action plan sets out how it will:

Develop a mechanism for collecting and using diversity data to measure success.
Set clear equity, diversity, and inclusion expectations in its upcoming single code of practice.
Publish guidance before early 2023 to help trustees understand and meet TPR’s expectations.
Work with industry stakeholders to focus on how the roles of employers, chairs, and professional trustees can be influential in diverse recruitment and developing a culture of inclusion.
Engage with trustees through TPR supervision to identify barriers to diversity and highlight best practices.