The Pension Protection Fund (PPF) has said that it will need to adapt its approach to achieve greater ethnic minority representation amongst senior managers, after its latest Diversity Pay Gap Report revealed that its median ethnicity pay gap has increased.

Marking the lifeboat's seventh Diversity Pay Gap report, the report reiterated the PPF's commitment to creating an inclusive workplace and continuing to make significant improvements to the diversity of its senior management.

The report showed the progress the PPF has made in addressing the imbalances in pay across gender, race and disability and long-term health condition pay gaps, revealing that the mean gender pay gap has fallen to its lowest level since the lifeboat began reporting in 2017.

However, whilst the PPF previously met its target to have 40 per cent female representation in senior management by 2021 a year early, it fell "narrowly short" of its new target to have 45 per cent female representation in senior roles in December 2023, with women in 43 per cent of senior manager roles at the end of 2023.

There was an improvement in both the pay and bonus gaps year on year for those colleagues reporting a disability, meanwhile, as the median pay gap improved from 2.0 per cent in 2022 to -2.4 per cent in 2023.

However, the median ethnicity pay gap increased from 14.3 per cent in 2022 to 15.9 per cent in 2023, which the PPF said was a result of its ethnic minority employees being underrepresented in areas of the organisation that command higher pay and bonuses.

The PPF also suggested that further progress has been "partly hindered" by low levels of staff turnover.

The report also revealed that while ethnic minority representation across the organisation has increased year on year, the PPF did not meet its goal of 30 per cent ethnic minority representation across the organisation by December 2023, as the overall proportion of ethnic minority employees was 26.3 per cent in September 2023.

The PPF also missed its targets at a senior manager level, having previously outlined plans to achieve 25 per cent ethnic minority representation and 4.4 per cent black representation by December 2023.

Instead, the report revealed that the proportion of senior managers from an ethnic minority background was 17.5 per cent, and black representation at senior manager level was 1.6
per cent in September 2023.

The PPF acknowledged that this lack of progress was "very disappointing", confirming that it would "adapt" its approach in this area to affect change.

In particular, the lifeboat said that its focus on the leadership pipeline by recruiting more people from under-represented groups into junior levels, nurturing their talent, and providing consistent development opportunities, is expected to help change the organisation for the better over time.

The PPF also said that it is looking forward to seeing a positive impact on its data in this area in future years following the appointment of its new CEO Michelle Ostermann.

Commenting on the report, PPF interim CEO, Katherine Easter, said: “We remain focused on investing in future leaders by bringing in more people from under-represented groups into junior roles and nurturing and promoting our internal talent.

"Although we may not see a positive impact on our pay gaps in the short term, we’re confident these actions will help change the makeup of our organisation and even our industry over time.

"Hearing from people with a range of different backgrounds and experiences supports us all in innovating and managing risk.

“One reason for our ethnicity pay gap is that most of our senior leaders are white. We acknowledge that we need to adapt our approach to achieve greater ethnic minority representation among senior managers.

"The board, executive committee and senior leadership team remain passionate about finding ways to ensure that we deliver on the commitments we made in our diversity and inclusion strategy to reap the benefits different perspectives bring.”

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