'Concerted effort' needed to address pay gaps, TPR says

The Pensions Regulator (TPR) has acknowledged that a “concerted effort” is required to address its ethnicity and sexual orientation pay gaps, despite positive progress in some areas.

TPR’s latest Diversity pay gap report showed that the regulator had made positive progress in reducing the mean and median gender, disability, ethnicity and sexual orientation pay gaps since 2022.

In particular, “great progress” was made in relation to its gender pay gaps, which are below 10 per cent, as well as its disability pay gaps, which are within its target of no more than 3 per cent and no less than –3 per cent.

According to the report, the mean gender pay gap was 3.2 per cent, a decrease of 3.8 percentage points compared to 2022, and the median gender pay gap is 5.7 per cent, a decrease of 4.4 percentage points compared to 2022.

TPR noted that it also continues to compare favourably to the wider Civil Service, where the mean gender pay gap is 8.1 per cent and the median gender pay gap is 9.6 per cent.

The mean disability pay gap, meanwhile, was at -1.9 per cent, in favour of employees with a disability, a decrease of 3.8pp compared to 2022, while the median disability pay gap is -1.3 per cent, in favour of employees with a disability, a decrease of 5.5pp compared to 2022.

However, TPR said that it recognises the need to do more, admitting that a "concerted effort" is required to address its ethnicity and sexual orientation pay gaps, which are still above 10 per cent.

Indeed, TPR's mean ethnicity pay gap was 14.9 per cent, in favour of white employees, a decrease of 3.6 percentage points compared to 2022, while the median ethnicity pay gap was 10.3 per cent, in favour of white employees.

In addition to this, the mean sexual orientation pay gap was 12 per cent, in favour of heterosexual employees, marking increase of 0.6 percentage point compared to 2022.

The regulator also acknowledged that despite positive progress in reducing its pay gaps, it maintains significant bonus gaps across all categories, with disability showing the largest gap.

Indeed, mean gender bonus pay gap was 11.5 per cent, in favour of men, a decrease of 0.7 percentage points to compared to 2022, while the mean ethnicity bonus gap was 9.8 per cent, in favour of white employees, a decrease of 8.7 percentage points compared to 2022.

However, the mean disability bonus gap was found to be -23.7 per cent, in favour of disabled employees, an increase of 0.3 percentage points compared to 2022, while the median disability pay gap is -39.3 per cent, in favour of disabled employees, a decrease of 13.3 percentage points compared to 2022.

TPR suggested that the disability bonus gap is driven in part to more disabled people in the upper quartiles receiving a bonus, as bonuses are calculated as a percentage of individual salary.

Reflecting on its latest report, the regulator said that it remains "confident" that its pay strategy is non-discriminatory in its design, and this is supported through our analysis.

Instead, it argued that its diversity pay and bonus gap variances are impacted by the under-representation of individuals with these characteristics in senior grades or in jobs that attract market premia.

Given this, it said that increasing representation within its executive committee, senior leadership team and across all levels of the organisation is a key part our EDI strategy.

It also confirmed that, by the end of March 2024, working in partnership with external specialists, it will have completed a review of our bonuses, including an evaluation of its practices across different roles and pay gaps and those with protected characteristics.

"We recognise that closing our diversity pay gaps for gender, disability, ethnicity, and sexual orientation will not be quick or simple, because pay gaps reflect wider internal and external factors, and we’re committed to taking the necessary long-term action to reduce them," the report stated.

TPR also shared a blog alongside its pay gap report, which stressed the importance of transparency when discussing equality, diversity and inclusion issues, arguing that this is a ‘small but important’ part of making workplace pensions work for all savers.



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