‘Board effectiveness reviews’ key to improving EDI across pension schemes, says lawyer

As we highlighted back in March, the Pensions Regulator (TPR) has published guidance for trustees and employers on equality, diversity, and inclusion. It came out in March last year but in recent months TPR has been stressing its importance, urging both governing bodies and employers to take active steps now to make progress on improving diversity across pension schemes. TPR’s concern is this issue will be sidelined, with action steps postponed or forgotten about completely, hence why TPR is keen to keep this issue on the news agenda. 

The guidance provides trustees and employers with a wide range of EDI areas to consider. Whilst TPR recognises that, for most, this is just the start of their journey nonetheless there is now an expectation that they will make significant progress in the weeks and months ahead. That point  was emphasised by TPR’s EDI lead, Sandisiwe Dhlamini, in a panel session back in January run by our pensions team alongside our D&I consultancy Brook Graham. It was featured in an article for Professional Pensions called ‘EDI - a call to action from the regulator’ which carried the regulator’s central message that everyone should read TPR's guidance and take actionable steps based on it.

Since that event we have been working closely with a number of clients to take the necessary steps to meet TPR's requirements for EDI. Precisely what those steps involve depends on where trustees and employers are on their journey, with most at a very early stage, but they include things like: 

- adding EDI to meeting agendas and initiate discussions to help break down some of the misunderstandings of what EDI is and how it applies
- gathering scheme data to understand the composition of the scheme membership in terms of EDI
- putting in place an EDI policy if they do not already have one, or updating their existing policy
- reviewing training needs on EDI; and
- reviewing board effectiveness and decision-making.

So, let’s consider that last point, reviewing board effectiveness. What does that mean in practice and who’s involved in that exercise? 
Christina Bowyer is head of pensions services at Pinsent Masons and works closely with trustee boards and HR Directors on this and I put that question to her: 

Christina Bowyer: “The way in which board effectiveness review works is an independent party comes into the board and works with the board on how their meetings are run, how their decisions are made and considers that from a completely independent point of view, and what their thought processes are behind that and some of that then through surveying the trustees, surveying the advisors, doing interviews, completely independent interviews, with the advisors and the trustees. Some of the feedback from that will mean that the lack of diversity, or the gaps in the board, will rise to the surface and then they can start to address some of the things that they haven't already got on the board through the different ways of picking up diversity, i.e. through advisors, etcetera.”

Joe Glavina: “TPR’s guidance came out in March last year but the general Code was published much more recently, in March of this year, and I noticed TPR has included in the Code a number of high-level EDI expectations for trustees which rather underlines the significance TPR is placing on EDI. So I guess trustees should, at least, read the guidance?”

Christina Bowyer: “Yes. The guidance on EDI is not particularly long. Some of it's a bit repetitive, but it's not particularly long and the trustee should know TPR’s guidance and then they should start to think about, with their advisors, well what are we going to do next? What are our first steps on the road to complying with this guidance? They've got a lot on their plate at the moment, trustees, there are lots of things that are coming out. There's been a lot of guidance from The Pensions Regulator under this umbrella of the general code but EDI is one of those things they will need always to pick up.”

Joe Glavina: “Finally, Christina, in a word, what are the next steps for boards?”

Christina Bowyer: “I think next steps for boards, really, please can you just do something. Put it on your agenda, pick up the guidance, make sure you understand it and then start to formulate a plan of how you're going to take action to comply with it.”
Back in April Christina talked to this programme alongside diversity expert Kieron O’Reilly about why improving EDI is essential to having a well-run pension schemes, and about TPR’s call to action on this. We’ve included links to both those programmes in the transcript of this programme for you.

LINKS
- Link to HRNews programme: ‘Call to action on EDI from UK’s pensions regulator’
- Link to HRNews programme: ‘Improving EDI essential to well-run pension schemes, warns UK’s regulator’