Pension scheme trustee boards are "falling behind" the corporate world in terms of gender diversity, Barnett Waddingham has warned, calling on the industry to set "measurable diversity targets" to help combat the issue.

The comments follow the findings of the Hampton-Alexander review, published today (24 February), which revealed that the number of women on boards of the UK’s largest public companies has risen 50 per cent since 2015 to 34.9 per cent, and that there are no longer any all-male FTSE 350 boards.

Barnett Waddingham, however, has argued that the landscape is “very different” on pension scheme trustee boards, with trustee board diversity ranked last place in its recent Top Pension Risks Survey, with nearly half of schemes viewing it as “minimal risk”.

The company highlighted the Pensions and Lifetime Savings Association’s (PLSA's) Diversity and Inclusion report from March 2020 as evidence of the lack of trustee board diversity, having found that 83 per cent of scheme trustees were male and 25 per cent of schemes had all-male trustee boards.

Despite this, it stressed that there is a “strong business case” for increasing board diversity, citing the findings of the McKinsey 2018 Delivering through Diversity report, which found that companies in the top quartile for gender diversity on their executive teams were 21 per cent more likely to have above-average profitability than companies in the fourth quartile.

Indeed, further research from the PLSA has also found that whilst 84 per cent of schemes agree that there needs to be more diversity, and a further 91 per cent believing that this would help improve decision making, almost half (48 per cent) have no specific diversity or inclusion strategy.

In light of these concerns, Barnett Waddingham policy and strategy lead, Amanda Latham, argued that the industry should "follow the lead of the corporate sector", stressing that there is "no time to waste", with the pandemic having further exacerbated some gender disparities.

She stated: "The lack of diversity in boardrooms goes beyond the FTSE. While the biggest company boards are under pressure to improve, they’re not alone in needing to take more action.

“In fact, pension schemes are falling behind when it comes to trustee board diversity. Yet they have the same corporate, professional, and personal responsibility to make decisions that will improve outcomes for their members.

“Inequalities are increasing in the UK, with some groups like working mothers being disproportionately impacted by job insecurity and reduced hours or pay, during or as a result of the pandemic."

Latham argued that improving the diversity of trustee boards could help address inequalities, as well as limiting unconscious bias and enabling consideration of different experiences, like caring responsibilities or family structures.

“But it’s clear that there are significant blind spots when it comes to understanding the relationship between performance and diversity, and equally the benefits in prioritising diversity and inclusion," she added.

“If we’re serious about making change on pension boards, we should be following the lead of the corporate sector, setting measurable diversity targets for scheme boards to reach.

"There’s no time to waste, so simply putting out statements when it comes to diversity is really no longer going to be enough.”

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