The pensions industry is doing “a million times better” on diversity – but there are still areas for improvement in recruitment practices.
Sarah Smart, who has chaired TPR’s board since 2021, said trustee boards had made good progress on improving age and gender diversity in particular.
In an interview on the VfM Podcast, published today, Smart said: “There is in the trustee community quite a lot more diversity in terms of age and gender – probably ethnic diversity is still a little way to go.
“I think the professionalisation of trustees has enabled that as well, because certainly in the member trustee situations that I’ve been in, it can still be really intimidating for members when they think they have to be really financially literate, sit in board meetings, and have to be of a certain type of person.”
“We are doing a lot better than we used to, but I still think there’s a real barrier to be overcome in understanding what skills we’re really looking for and what good looks like.”
Sarah Smart, TPR
Research by WTW, published last year, showed that the rapid growth of the professional trustee sector was also fostering greater diversity in gender, ethnicity and age.
Two in five (42%) professional trustees are female, compared to 28% of the overall trustee population. Nine in 10 professional trustees are white (91%), closer to the UK population compared to the overall trustee population, which is 96% white.
The median age of professional trustees is 51, younger than the overall trustee population’s median age of 61.
Experience and skills
“We are doing a lot better than we used to, but I still think there’s a real barrier to be overcome in understanding what skills we’re really looking for and what good looks like,” Smart told podcast hosts Darren Philp and Nico Aspinall.
“When I was applying for trustee roles as a young female, people would look at me and go, ‘you can’t possibly do that job’. Now, because I’ve done the things that I’ve done, they’ll go, ‘Oh, yes, of course you can do that job’.
“My skills are exactly the same as they used to be. They were just judging me on appearance.”
Often when recruiting trustees, she said, it can be easy to equate someone’s experience with having performed well in a role, when that might not be the case. Recruitment processes needed to test for these skills, she suggested.
Smart cited her own experience as chair of TPT Retirement Solutions – a role she held for eight years – and as an independent member of the investment committee for Unilever’s UK pension scheme.
“People were far more impressed by my role with Unilever, because they know the brand name, and they didn’t know what TPT was,” Smart said.
Diversity of thought
TPR published its first Trustee Diversity and Inclusion survey in March last year. It showed that most trustees recognised the importance of diversity in helping decision making, governance and member outcomes.
Roughly a quarter (24%) of the 2,197 trustees TPR surveyed were women, while 9% were aged under 45. Both figures were well below the average for the UK population. However, ethnic minority representation – at 5% of trustees surveyed – was in line with the UK population.
Smart said TPR was not in favour of quotas as this was not a good way of measuring actual diversity.
“You might have a board that looks like it’s got lots of different people on it, but you don’t actually have any diversity of thought,” she said. “Measuring the two is difficult.
“For us, it’s about changing behaviour, seeing those different sort of recruitment practices start to really be embedded across the industry, and getting that different debate.”
Smart emphasised the need for trustee boards to understand previous industry developments, but also to look to the future.
“We need people who not only understand stuff that’s happened before – because it’s important not to forget and we don’t want to repeat the mistakes of the past – but we also need people who think about how the future is going to work and understand the needs of savers in the future to make sure we deliver the best results,” she said.
