The Pensions Regulator (TPR) has published equality, diversity and inclusion (EDI) guidance for pension scheme governing bodies and employers.

The guidance aims to help scheme governing bodies and sponsors to improve the EDI of their scheme’s board, and covers a number of key topics, such as the role of the chair, EDI policy and performance assessments, and fixed-term appointments.

In particular, the guidance recommended that pension schemes should have an EDI policy, covering an agreed definition of EDI, the EDI aims of the governing body and an EDI training plan.

It also suggested that assessments of the governing body’s performance should include how well EDI has been, and continues to be, embedded into processes, according to scheme objectives.

The guidance also encouraged sponsoring employers to consider widening the pool of candidates for governing bodies beyond senior management positions and highlighted the value of being a trustee on an employee’s personal and career development.

More broadly, the guidance suggested that governing bodies may wish to consider fixed terms, usually between three to five years, for member-nominated trustee positions to encourage a scheduled change to the trustee board bringing new perspectives to the group’s decision making.

Where there is a professional trustee, the guidance also reminded schemes that it is possible for governing bodies to change the individual representative from the firm over time to support their board’s diversity.

The guidance also acknowledged that governing bodies may find it challenging to address diversity gaps through member-nominated and employer-nominated trustee positions, suggesting that these bodies could instead consider an independent or professional trustee position.

The regulator also added a section on inclusive communications to its guidance on communicating and reporting for defined contribution schemes in particular.

TPR said that the update aims to help ensure scheme communications consider the diverse range of backgrounds, needs and vulnerabilities of their savers, recommending that all communications should be checked for bias and to ensure they avoid inclusion of stereotypes.

Commenting on the guidance, TPR director of policy, analysis and advice, Louise Davey, stated: "All savers deserve to be in a well-run pension scheme that makes decisions in their best interests.

“Harnessing diverse views can help pension scheme governing bodies weigh issues in more detail and openly consider aspects important to those impacted by their decisions.

“This enables all those involved to better understand and mitigate scheme risks, avoid unintended consequences, and learn from what is working and what is not.

“Employers also have an important role in ensuring EDI is considered by their scheme. And they have a duty to support employees who are nominated to their scheme’s governing body. That’s why we’ve provided specific guidance for scheme employers.

“While we recognise different scheme types, sizes and sectors may face different challenges, we believe there are some quick and easy steps that can and should be taking to improve schemes’ EDI now.”

The guidance has been welcomed by some industry organisations, with Aon partner, Susan Hoare, highlighting the publications as an "important step in the right direction".

She continued: "My experience is that many boards are keen to embrace EDI but don’t quite know where to start in a pensions environment.

"This guidance provides clarity and key areas of focus such as creating inclusive boards, inclusive communications with members, understanding the board’s diversity characteristics and skills, and recruiting diverse member-nominated candidates.

"This removes some of the ambiguity for schemes that didn’t know where to start – and, importantly, provides some case studies and examples of the actions boards can take.

“It’s also great to see the focus on inclusive trustee boards. The tone on inclusion is set by the chair. If the chair doesn’t create the right atmosphere in the room - in the way they introduce topics, encourage others to contribute or make others feel that they can ask a ‘silly’ question - then a scheme won’t get the value of the whole board.”

Hymans Robertson consultant, James Smith, also welcomed the guidance, particularly the regulator's guidance for employers in addition to trustees and "especially a sample job advert for a trustee".

"This will provide a framework for all stakeholders in this area and help to make the moves that are needed to ensure that boards are fully meeting the requirements, and embracing, equality, diversity and inclusion," he continued.

“We also support the emphasis on the importance of the role of the chair in ensuring a strong culture of inclusion that values EDI, and the recognition in the communications guidance that consideration of vulnerable members is an important part of membership EDI considerations.

"We look forward to working with TPR and the wider industry to broaden the understanding of EDI issues over time; and supporting trustees and employers on how to they can take meaningful action to improve EDI issues in society through their pension arrangements.”

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