TPR Guidance on equality, diversity and inclusion (EDI)
The Pensions Regulator has published guidance providing practical examples of how trustees and employers can improve diversity and inclusion of trustee boards. It wants to see more action. A lot falls on the shoulders of Trustee Chairs. The role of the employer is highlighted.
In its new guidance the Pensions Regulator’s provides practical examples to encourage trustees and employers to improve equality, diversity and inclusion (EDI) of those governing pension schemes, including trustee boards and pension scheme managers.
The guidance is not law. However its objective is to improve robust decision-making which is a building block of the trustee role. Implementation of any changes should be scheme specific and proportionate. The Regulator acknowledges that some steps might be quick and easy, others may be longer term aspirations.
Key themes of guidance for trustees are:
- Role of the Chair – much of the guidance provides examples of how a trustee Chair can drive and promote EDI on the board. They are expected to create an open and inclusive culture in which opinions are shared and meetings run. The Chair is encouraged to proactively engage with the employer or provider who appoints trustees about EDI. Succession planning for the Chair is a focus.
- Training – the guidance suggests trustee training on EDI and consideration of an EDI policy or principles.
- Recruitment – there are wide ranging examples of how to attract diverse candidates. These include identifying gaps in the skills, knowledge and experience, support for new trustees and focussing on recruitment messaging. The guidance also covers the selection and review of advisers and service providers.
- Member nominated trustees (MNTs) – Fixed terms for member nominated trustees, with staggering turnover, appears to be encouraged. There is support for including deferred members in the MNT process. Trustees are encouraged to think about any advantages of selection (e.g. using a panel) over election to improve EDI.
The Regulator also published specific guidance for those with power to appoint trustees. Trustees could share this with scheme sponsors.
Trustee Chairs, take note – the Regulator has made a public commitment to help drive equality, diversity and inclusion on trustee boards.