Pension trustee boards and gender diversity: Is the glass ceiling shatterproof?

Statistics show that women hold only 26 per cent of board seats at the UK’s largest corporations, despite constituting half of the general workforce.

A recent survey by Hermes Asset Management has shown that more than 75 per cent of large UK investors do not prioritise gender diversity when making new appointments.

Women think they won’t be fairly considered

Margaret Snowdon, PASA

Experts say that change is proving equally slow in the pensions industry, but also caution that diversity is about more than gender.

No insistence on status quo

Margaret Snowdon, chair of the Pensions Administration Standards Association, said still not enough women are coming forward for board positions because “they think they won’t be… fairly considered”, and because of a lack of female peers in senior pension roles.

Female representation is “very low at the trustee level” at circa 25 per cent, she noted.

However, she said that quotas should not be imposed as women should be hired for their skill sets, not their gender.

Snowdon said the “biggest contributor” to gender equality was the increased use of professional recruitment services, as they replace an “informal network” which tends to appoint men from a narrow group within a scheme.

There is “almost certainly bias” lingering, which is why more schemes should make use of professional recruiters, she advised.

Snowdon pointed out that 50 per cent of scheme members are female, so an all-male board risks alienating them.

However, while change is slow, women are not “automatically excluded” from board positions, she said, adding that there is “no great desire to preserve the status quo” for its own sake among pension schemes.

Snowdon emphasised that diversity should go “beyond the confines of gender”, to include factors such as ethnicity and age.

Equality within trustee boards

Rosalind Connor, partner at pensions law firm Arc Pensions Law, said gender diversity has only recently become an issue for trustee boards because they have long been “the poor relation of management groups”, and a lack of attention has meant less impetus to reform.

She said that, “by instinct”, change is not welcome at management level in any sector, but that female representation on trustee boards has been improving, especially as HR departments, which tend to employ many women, become increasingly involved in recruitment.

Connor said trustee boards are unusual structures in that all members have roughly the same role, meaning that women are not delegated to specialised, uninfluential positions as they are in many corporate boards.

“In terms of total numbers trustee boards look bad, but they have an equality within their system”, she noted.

Moreover, low diversity is impeding schemes’ performance; they “can’t make considered decisions without people challenging the status quo”, Connor remarked.

Connor said she did not think that low diversity harms female scheme members specifically, as “women don’t need to speak to women” to make sensible savings. The real problem with women and savings is that many do not earn enough to save adequately, “which is the bigger equality issue”, she added.

Boards need a blend of skills

Geoff Ashton, client director at professional trustee company Capital Cranfield Trustees said that trustees’ rewards are insufficient and the role is time-consuming; as such, finding trustees of either gender is preoccupying schemes at the moment.

However, he pointed out that diversity has increased. More stringent diversity regulation has benefited schemes; as they have been prompted to look at more independent trustees, there has been a “natural increase” in diversity, as a number of independents are female.

Ashton said a lack of female trustees should not disadvantage female members “from a purist angle”, since trustees should not practice favouritism. However, if trustees are doing so he advised they should “take immediate action” to rectify the situation.

Above all, he said, when appointing trustees, a scheme should be asking: “Will [the appointee] challenge our advisers in a way that the current board doesn’t?”

Schemes should never discount the best trustees by privileging gender for its own sake, he said.

An effective board should “blend skills”, and hence gender diversification should be an “intuitive” strategy. However, positive discrimination “can work both ways”, Ashton notes.