Pension scheme members are becoming more diverse, but this is not being matched by the personnel in the companies and teams offering these services, according to Nelu Solutions CEO Uche Enemchukwu.
Enemchukwu told conference members: “The reality is that there is a fundamental conflict occurring right now that we need to address. Our members are becoming increasingly diverse, yet we are not very diverse in the benefits industry and the institutional investment space.”
She pointed out that members from many ethnic minority backgrounds have had less exposure to traditional workplace pension plans. The industry, which is resistant to modernising its strategy, design, and communication, refers to these members as “non-traditional”. Members are concerned about ESG and DE&I, but according to Enemchukwu, the industry is stagnant and has no idea where to begin.
Data from the OECD and the Employee Benefits Research Institute show the extent of the gender savings gap. Men can have up to three times the average retirement savings as women, for example. But this gap is further widened when ethnicity is taken into account.
In the United Kingdom, the average total pension received by a woman of colour is 51 per cent less than that received by a white man.
Enemchukwu said the racial and ethnic savings gap is widening, and pensioners from underrepresented racial groups fared up to 24 per cent worse than pensioners from other racial groups.
Biases and barriers to employment, advancement and savings opportunities are contributing to this gap. For example, black male graduates earn up to 17 per cent less than white male graduates.
There is also a stronger shareholder push for change and a changing regulatory environment around the world. During the 2021 proxy season, support for shareholder proposals requesting corporate diversity data disclosure was nearly unanimous.
Enemchukwu divides her proposed strategy for mitigating the impact into three categories: care, engage, and diversify. She says that, firstly, a focus should be placed on the systemic barriers and social challenges associated with health and wealth that affect our members, families, and communities. According to Enemchukwu, this can be accomplished by amending plan design and administrative procedures that disproportionately disadvantage certain members or perpetuate inequities.
Second, disparities must also be addressed to improve outcomes and to have a broader impact, with programmes and investment strategies being used to engage members.
She added: “We have to use language that resonates, and we have to use mediums that are accessible.
“Finally, teams, vendors, and consultants must be diverse for those designing, communicating, and supporting our programmes and strategies to bring diverse perspectives and reflect the growing diversity of member populations.”
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