Inclusion report highlights lack of pension trustee board diversity

Aon has published a guide to give pension schemes and professionals “practical and implementable” suggestions to improve diversity on their trustee boards and considerations for their memberships.

The firm’s Practical Diversity and Inclusion for Trustees paper revealed that just one in five pension scheme trustees are female and 2.5 per cent are under the age of 30.

Under 7 per cent of trustees are over the age of 70 and the ‘average trustee’ was found to be a 54-year-old male with a university degree and 10 years of experience.

The guide stated that credible statistics for black, Asian and minority ethnic (BAME) trustees was “scarce”, but it was “fair to assume” that representation was very low.

It also highlighted that there may be unconscious bias in trustees’ decision-making for individual members, such as in discretionary death benefit decisions and adviser appointments.

Aon urged trustees to consider the accessibility of member communications for those with physical disabilities and for those with lower pension knowledge levels.

The guide also noted that scheme rules could have been written decades ago and include unconscious biases, recommending that trustees and their scheme lawyers undertake a diversity and inclusion audit of their rules.

A consideration of diversity and inclusion on investment decisions was also recommended, such as whether scheme investments aligned with members’ responsible investment preferences or religious beliefs.

Aon noted that unisex factors and averages used in actuarial calculations did not address all the diversity issues are not necessarily straight-forward for all scheme factors.

Its paper included a summary checklist for pension schemes as a guide to assess whether they are considering diversity and inclusion appropriately.

Commenting on the guide, The Pensions Regulator (TPR) executive director of regulatory policy, analysis and advice, David Fairs, said: “TPR welcomes the development of guides like this which help trustees and pension schemes take practical steps to improve their diversity and inclusivity, something we believe is crucial for better decision making.”

Aon partner, Lynda Whitney, added: “We have looked at how diversity and inclusion can impact decision making across a wide range of pension scheme areas, including trustee appointments, member communications, scheme rules, investment and even in actuarial calculations.

"With this guide we are aiming to give trustees some initial practical and implementable thoughts and ideas on how they can improve their schemes’ thinking on and approach to diversity and inclusion.

“As we move towards 2021, and as trustees consider their schemes’ activities for the coming year, we hope that this guide can aid them in considering how to embed diversity and inclusion considerations into their objectives and how they can go about implementing improvements and monitoring change.”

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