On 28 March 2023, the Pensions Regulator (TPR) published two sets of equality, diversity and inclusion (EDI) guidance: one for governing bodies; and one for employers. In parallel, TPR has published an overview explaining what EDI is, why it is important, and the benefits of improving EDI across the pensions industry. TPR hopes the guidance, which was developed in conjunction with an industry-wide working group which I was pleased to be part of, can be used by pension scheme governing bodies and sponsoring employers to improve the EDI of their scheme’s board.

Actions for trustees

Develop and maintain an EDI policy, which should include an agreed definition of EDI, the EDI aims of the governing body and an EDI training plan. The importance of the role of the Chair is heavily emphasised, as TPR recognises that it is the Chair who will lead EDI progress and set the tone for discussions surrounding inclusivity, “embedding it in the culture of the governing body and ensuring that any EDI policies are followed.”

Alongside the implementation of an appropriate EDI policy, EDI goals and objectives should be agreed at the start of the pension scheme year. The performance of the governing body in relation to these objectives can then be assessed and reviewed on an annual basis.

Assess the trustee board’s “diversity of characteristics, life experiences, expertise and skills” to see where gaps may exist. If a trustee board is struggling to fill any existing diversity gaps, the guidance offers practical suggestions including:

appointing independent or professional trustees;

amending member nominated trustee procedures to allow deferred members to stand for appointment (this could help produce a more diverse board particularly in closed schemes with large deferred member populations). Traditionally, trustees have been reluctant to do this as there is no legal requirement to do so and due to concerns around potential conflicts of interest (and the protection of confidential information). However, TPR considers that any such concerns can be addressed during selection interviews and managed through conflict policies and confidentiality agreements;

using an interview process or selection panel (either in place of, or in addition to, a member nominated trustee ballot process), as studies have shown that members with certain characteristics may be less likely to apply if MNTs are elected, which inhibits EDI;

if diversity cannot be achieved on the trustee board, looking to advisers to ensure diversity of thought.

Consider introducing a fixed term staggered rotation programme for all trustees, whether employer nominated, member nominated or the appointed representative of a professional trustee company.

Support new trustees by providing training and a structured induction process, coupled with a buddying, mentoring and/or shadowing process.

Make reasonable adjustments for those applying to be a trustee and existing trustees with disabilities. This should extend to the trustee board’s selection process and may include offering to conduct interviews or meetings remotely or providing braille or large-print documents in advance.

Actions for employers

As well as helping and supporting the trustees with the above, employers should:

Ensure EDI is a key consideration in any tender process for the appointment of a professional trustee;

Consider widening the pool of candidates appointed as employer nominated trustees beyond those in senior management positions;

Ensure that for employed trustees, they create a supportive work environment which understands, respects and support the considerable time and work commitment required of a pension trustee. Helpfully, TPR has provided guidance to employers on the statutory protections given to employed occupational pension scheme trustees under the Employment Rights Act 1996 (“ERA”). The lack of guidance on these statutory protections and, in particular, whether they extend to an obligation to reduce an employee’s workload and performance targets to allow them time to complete their trustee duties, was something we considered in our blog of 25 May 2022, following a decision of the Employment Tribunal on the point.

TPR has confirmed that in its view, section 46 ERA (which gives trustees a right not to be subject to any detriment by their employer for being a trustee of the employer’s scheme) obliges an employer to reduce any employee’s workload by a reasonable amount, if they work as a trustee of the employer’s occupational pension scheme, to give them time to fulfil their trustee duties. However, given that the statement is included in regulatory guidance and not in a Code of Practice, employment tribunals are not legally required to take it into account when determining whether the statutory legal requirements are met. Nevertheless, employers would be well advised to implement the guidance and read the top tips highlighted in our earlier blog if they wish to ensure a diverse, representative and effective governing body for their schemes.

TPR hopes the guidance, developed with an industry working group, will be used by pension scheme governing bodies and sponsoring employers to improve the EDI of their scheme’s board.

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