Pensions industry still behind on gender pay gap

Women on median UK hourly pay earned 9.1 per cent less than their male counterparts in 2017, according to the Office for National Statistics. Only one of the 18 companies and bodies involved with pension provision that were analysed by Pensions Expert could beat this national average.

Consultancy PwC and RPMI, the company that handles investment and administration for the Railways Pension Scheme, top the list, with median pay gaps of as much as 34.4 and 33.7 per cent respectively.

When I first started as a trustee not only were nearly all trustees 65-year-old white men, but once or twice I was rejected in an interview and I’d think it was because I wasn’t a 65-year old man

Naomi L’Estrange, 2020 Trustees

Very few companies in the pensions industry currently publish gender pay gap data. However, from April this year, all UK-based firms with more than 250 employees will have to disclose the information.

Glass ceiling still in place

The Department for Work and Pensions is the only organisation with a below-average pay gap, which is non-existent using a median calculation. On a mean calculation, women earn 5.3 per cent less than men.

Other public bodies provide less exemplary statistics. Based on the median, female workers at the Financial Conduct Authority earn 20.9 per cent less, while the board of the Pension Protection Fund has a gap of 20.4 per cent.

Rather than describing workplaces in which women are paid less for doing the same job as men, the reports analysed by Pensions Expert suggest that men dominate the highest-paid roles at the top of the companies.

For example, 69 per cent of the top-quartile salaries at B&CE, the provider of The People’s Pension, were held by men. Seventy-seven per cent of the staff employed on lower middle pay packages were women, with the bottom and upper middle quartile salaries evenly split.

Diversity has been a buzzword in the pensions industry for some time, with advisers and industry bodies increasingly keen to tackle imbalances on trustee boards, or, from an investment perspective, on corporate boards.

But the statistics on pay suggest that the industry might not be practising what in preaches, in terms of ensuring diversity in the higher echelons of its companies.

Industry still struggles on diversity

If the results are disappointing, they are also hardly surprising, says Naomi L’Estrange, a trustee director at 2020 Trustees.

The gender pay gap methodology reveals “how far up women get promoted more than anything else”, she says. “In financial services generally that’s pretty poor.”

Trustee boards are perhaps more “pale, male and stale” than any other group in the industry, but according to L’Estrange, a quirk in the pay gap calculation means there is an inverse gender pay gap among trustees. This is because a higher proportion of female trustees are professionals.

Nonetheless, she welcomes the work done by organisations like the 30% Club and the Pensions and Lifetime Savings Association to promote better diversity and combat biases.

“When I first started as a trustee not only were nearly all trustees 65-year-old white men, but once or twice I was rejected in an interview and I’d think it was because I wasn’t a 65-year old man,” she says, noting the use of words like “gravitas” or “experience” as euphemisms for not being male.

Sophia Heathcoat, an investment consultant at Barnett Waddingham, shares similar frustrations about industry events, recalling an investment conference at which she was the only female participant out of 17 speakers.

“I have started to note recently that trustee boards seem to be taking more notice of whether pitch teams are diverse, whether managers or advisers,” she adds. “However, I am yet to be convinced on whether this has an impact on the results of the pitch.”

Getting board composition right

Of course, to say that the industry is not living up to its words on diversity should not be to let member-nominated trustees off the hook.

Men make up 81 per cent of all trustee boards, according to research published by consultancy Aon Hewitt, which could make them susceptible to ‘groupthink’.

It has sometimes been argued that the legacy nature of defined benefit schemes makes the lack of age diversity in particular a tricky problem to solve, as few young savers enjoy membership.

“It doesn’t necessarily follow that all those trustees have to be members,” says Lesley Williams, immediate past chair of the PLSA and group pensions director at Whitbread.

She notes that schemes providing both DB and defined contribution benefits have particularly diverse pools of potential trustee recruits, and says schemes should think about the range of skills and perspectives they need when making appointments.