Call to action on EDI from UK’s pensions regulator

The Pensions Regulator’s (TPR’s) final version of its single Code of Practice has been laid before Parliament and came into force on 28 March. The General Code consists of 51-topic based modules combining 10 of its existing Codes of Practice into one. It’s a welcome development which should help to improve the operation of pension schemes and manage risk for both members and trustee boards.  

The Code has been a long time coming following a lengthy consultation and has resulted in a number of changes to the final version. Notably, as part of its equality, diversity, and inclusion (EDI) strategy, TPR has taken the opportunity to add high-level EDI expectations for trustees, consolidating on its detailed practical guidance which was published in March last year. 

That 2023 guidance was aimed at both pension scheme governing bodies and sponsoring employers and 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. That event featured last month in an article for Professional Pensions called ‘EDI - a call to action from the regulator’ which carried the regulator’s central message was that everyone should read TPR's guidance and take actionable steps based on it.

Christina Bowyer was on that panel alongside Brook Graham’s D&I specialist Kieron O’Reilly. Earlier Christina joined me by video-link to discuss the guidance and what TPR is expecting by way of a response to it. First question: where exactly are governing bodies and sponsoring employers on this journey?

Christina Bowyer: “So, I think sponsoring employers, as employers, have been thinking about EDI for quite some time and are probably further down the road on this but I would say trustee boards are just at the beginning of their journey on EDI. The guidance from the regulator came out in March 2023 but actually most schemes that we're working with are starting to think about this and put it on their business plans and their agendas and we are encouraging them to put it on their agenda for this year, 2024.”

Joe Glavina: “In your featured article for Professional Pensions you describe TPR’s EDI guidance as a call to action. What do you mean by that?” 

Christina Bowyer: “It’s a call to action because The Pensions Regulator really wants trustee boards, and the sponsoring employers behind them, to ensure that members are getting the best outcomes they can from the best decision making that they can provide and that includes thinking about the diversity of the board and the way in which the board is going to be made up in the future. So part of the guidance is pushing the chair of each trustee board to ensure that they include equality, diversity, and inclusion in the way in which they make decisions, and also review the way in which they make decisions to ensure that that is included. The chair is also being pushed to think about succession planning for both themselves and for member nominated trustees and appointed trustees.”

Joe Glavina: “The regulator has been gathering EDI evidence through its trustee survey and is going to be doing some monitoring around that and building case studies, and so on. Does TPR expect trustee boards and sponsoring employers to conduct surveys and gather evidence on themselves?”

Christina Bowyer: “I would say the regulator expects trustee boards and employers to consider the way in which their board works and whether it's effective and whether the decision makers making is effective. They should also know the pension scheme they have and know the membership and the way it's made up. That doesn't mean to say that they only concentrate on that membership in terms of their EDI, but it does mean to say that they should have at least a knowledge of the membership that they've got, and that includes beneficiaries as well as members, by which I mean the people who benefit from pension arrangements perhaps once the member has died.”

Joe Glavina: “Of course, virtually every employer out there, certainly our clients, will already have an EDI policy of some sort. Is that a good starting point?”

Christina Bowyer: “I'm sure it's a good starting point to start thinking about well what does the employer already say about EDI? Let's think about the pool of people that we have who are the workforce and therefore the members of the pension arrangement and let's use it as a starting point. But it isn't the only thing that we need to consider because pension scheme considerations will be slightly different to company considerations and by that I mean things like when you're making a decision as a trustee, you might have a discretion to use in order to pay a benefit to a particular person, and when you're using that discretion you really need to think about what are the relevant considerations and one of those will be have I brought an appropriate thought process to this decision that I'm making, including, am I thinking about equality, diversity and inclusion here?”

Joe Glavina: “What is your final message to viewers watching this, Christina?”

Christina Bowyer: “I would say everyone is at the start of the journey in terms of the pension schemes that we're looking at, and pretty much everyone in the industry. So, start your journey now and start thinking about the guidance from The Pensions Regulator because that's what they expect and that is their call to action. Start looking at the guidance and then start thinking about how it applies to your pension arrangements.”

A reminder. TPR’s General Code of Practice came into force on 28 March and can be accessed from TPR’s website. The EDI guidance meanwhile was published a year ago, in March 2023, and is in two parts – one part for governing bodies and the other for employers. We have included links to both in the transcript of this programme for you.

LINKS
- Link to TPR’s General Code of Practice
- Link to EDI guidance