On the go: Increasing diversity and making trustee boards more inclusive will produce longer and more difficult discussions — and that is a good thing, according to David Fairs, executive director of regulatory policy, analysis and advice at the Pensions Regulator.
TPR is of the view that trustee boards are not sufficiently diverse, and has set up a working group as part of its equality, diversity and inclusion strategy.
In a blog post published on Tuesday, Fairs said regular meetings had begun in January and the working group now has four “work-streams”.
These are looking at the role data can play in bringing diversity and inclusion to governing bodies, developing best practice in the composition of boards, developing “practical tools” to share best practice on recruiting trustees, and “delivering engagement” with employers to help broaden the appeal of trusteeship.
Data and research will be shared over the coming months, and Fairs argued that the industry must “make significant change” to be more “diverse and inclusive”, and treat equality as “a right not a privilege”.
“The majority of trustees and those in the pensions industry are generally trying to do good things — to look after savers’ interests and deliver the best outcome for them. However, sometimes things go wrong and trustee boards do not take the right path,” he wrote.
“It is not deliberate and when we see these types of cases at TPR we wonder why no one spoke up. Why didn’t they ask: are we sure this is a good idea? Are we sure we can bear the risk we are taking? Should we take what we are being told at face value or should we push a bit harder?”
Fairs criticised “group think”, arguing that trustee boards that are not diverse, “ risk knowledge gaps, entrenched ideas, biased thinking and poor decision-making, which puts savers at a disadvantage”.
“To be clear, diverse trustee boards may feel more uncomfortable, and that’s not a bad thing. There will be more debate and challenge, board meetings will take longer and have more disagreement,” he explained.
“The trustee chair might have a tougher time building consensus. However, that will ultimately lead to better decisions, even though it won’t feel as straightforward as when everyone just nods decisions through.
“We want to see all schemes large and small truly embrace the value of diversity and take strident steps to bring about change which will lead to better governance,” he added.
