Key themes in the regulator’s new EDI guidance

The guidance is part of the ongoing push from TPR to weave EDI into the fabric of how pension schemes are run. The latest guidance outlines the key players that can make a difference to the EDI landscape and assigns them tangible and specific roles.

It will provide clarity and direction for the key players, with more expected from the regulator on this area as the year progresses. Not all pension schemes will be in a position to incorporate all aspects of the guidance, but if all involved play their part they will become agents for real change. 

The guidance emphasises that if each of the stakeholders play their part, then together more can be achieved in the EDI pensions landscape

EDI is no longer something that schemes can ignore, and with tangible examples set out in the guidance it should encourage engagement. TPR’s commitment to EDI sits alongside the single code of practice, which is expected to provide more clarity on what it expects of schemes in terms of governance. 

The key players 

The role of the chair is emphasised throughout the guidance, as they can support adaptive thinking and foster a diverse, inclusive culture. The chair is encouraged to forge individual relationships with all trustees so that speaking openly is the norm and any required reasonable adjustments can be made to maximise the individual and collective performance of the trustee board.

The use of subcommittees, where relevant, is encouraged as they provide trustees with the opportunity to gain experience of chairing and taking the lead in meetings.

The employer is given their own guidance – recognition of the role that they have to play in EDI. That guidance focuses on the employer’s role when selecting and appointing employer-nominated directors/trustees and independent trustees. It encourages employers to consider END/Ts who are not in senior management positions, as they can bring other skills and life experiences to the role.

There is an emphasis on an individual’s potential and life experience, rather than their existing skill set, as this can be attained with training. 

Underrepresented groups should also be considered as potential trustees and thought given to how they can be encouraged to apply – this could include paying trustees or offering a structured induction process. Other supportive ideas include buddying, mentoring and shadowing to help integrate new trustees. 

For trustees who are employed by the employer, the guidance states that they should be given enough time to carry out their trustee role, which may mean reducing other workloads.

The selection process is key to attracting a varied pool of trustees. TPR recognises that many schemes’ nomination process could be simplified and adapted to attract a more diverse pool of candidates. For example, by requiring only one nomination, allowing candidates to self-nominate or considering maximum term lengths for existing trustees.

Communication sent to potential member-nominated directors/trustees with inclusive images and language has proven to work well, as has making the application accessible through email, print or post, including braille format.

We also see schemes going further and taking various steps – for example, EDI training for the selection panel, videos of existing trustees, collecting EDI data on candidates – to put EDI at the heart of the MND/T appointment process.

TPR believes it is important to assess the existing diversity of the trustee body, through considering a trustee’s life experiences, skills and personality type. This seems a logical pre-step to then taking EDI into account in new trustee vacancies.

Those outside the governing body

TPR recognises that trustees can look to broader teams to help with their EDI goals. 

Advisers and service providers should be asked to provide evidence and information on their EDI initiatives and how they aim to maximise their client’s EDI potential. Using focus groups is another mechanism for trustees to improve their diversity of thought.

A theme of TPR’s guidance is a recommendation for trustees to clearly set out their EDI goals and monitor progress regularly. As EDI can be a broad area, clear aims can be very helpful for creating a strong direction of travel.

Reviews on an ongoing and annual basis are important to reflect on how well EDI is becoming embedded in the way schemes are run – this can involve open dialogue, survey responses and ongoing feedback.

Overall, the guidance emphasises that if each of the stakeholders play their part, then together more can be achieved in the EDI pensions landscape.

Daniella Farsiani is an associate at Eversheds Sutherland