A growing number of pension schemes and professional trustee firms have now set equality, diversity and inclusion (EDI) targets, but attempts to improve performance in this area is being hampered by deficient data, according to new research.
In total almost half (46 per cent) of the 120 UK pension funds and professional trustees funds surveyed had implemented EDI strategies — a significant increase on the 26 per cent that had these in place in 2022.
A further 28 per cent of schemes and PT firms have established specific EDI targets — up from 11 per cent reported in the previous survey.
The research by Cardano — which owns Now Pensions — was undertaken by Mallowstreet. It also looked at the reasons why firms were embracing EDI strategies.
It found that 60 per cent of respondents said improved EDI should lead to better governance and decision-making, while almost two thirds (62 per cent) see it as a means to broaden skillsets.
Leadership sets the direction on EDI for the majority of UK schemes and trustee firms (69 per cent), with two in five (42 per cent) influenced by regulators.
But despite this progress, significant barriers remain to effective implementation of EDI strategies. The research highlights recruitment as the most common challenge, with nearly half (46 per cent) of pension professionals citing the failure to attract diverse talent as a primary barrier to improving EDI.
Social and gender inclusivity has improved. People who attended state schools are well represented on the majority of trustee boards (46 per cent of trustees work at schemes where at least 80 per cent of the board attended state schools), while 21 per cent of respondents work at schemes where at least 40 per cent of board members are women, up from 17 per cent in 2022. However, respondents acknowledge the need for greater efforts to attract a more diverse range of talent, especially from underrepresented groups such as neurodiverse individuals, minority ethnic backgrounds, or people with disabilities.
Cardano says the research shows that the absence of comprehensive diversity data also poses a significant risk to the effective measurement of EDI and progress of initiatives across the pensions industry. More than one in three (34 per cent) pension schemes do not collect any diversity data on members at all.
Among those that do, the focus is often limited to basic characteristics such as age (59 per cent), gender (43 per cent), and marriage or civil partnership status (42 per cent). This data deficit extends to professional trustee firms, where less than half (36 per cent) collect EDI board statistics.
One in three (33 per cent) of respondents highlight the difficulty in measuring EDI, underscoring the need for improved data collection practices to support meaningful evaluation and progress within the industry.
The results also show increasing engagement with sponsors. Specifically, DC schemes (50 per cent) and trustee services firms (50 per cent) demonstrated greater proactivity in discussing EDI with sponsors. They also expect higher EDI standards of providers as well, with 43 per cent of DC schemes saying they would not give a mandate to a provider which fails to meet their EDI standards.
This contrasts to the DB sector, where almost ihalf (46 per cent) of schemes which would take no action. A total of 50 per cent of trustee firms would consider requesting a change to the composition of a provider’s team if they failed to meet their EDI standards.
Cardano head of trustee engagement Gillie Tomlinson, says: “It’s positive to see the importance of EDI continue to rise up the agenda. We are seeing a growing appreciation of its benefits among schemes and trustees alike. The increase in both target- and strategy-setting is indicative of the pension industry’s growing commitment to fostering robust policies and driving positive change.”
She adds: “Despite this positive momentum, there remains a substantial and persistent EDI gap that requires attention. Succession plans should look to prioritise EDI, and we need a concerted effort to attract diverse talent across the industry.
“TPR’s helpful guidance launched last year sets out several alternative approaches schemes can adopt, like staggering the turnover of roles. Incorporating measures such as knowledge transfer, mentorship programmes and career development pathways can also help bring about a more inclusive pension landscape.
“It is also essential to recognise that effective management hinges on accurate measurement. TPR’s survey last year was a crucial exercise to help the industry have a better understanding of trustee diversity.
“However, collectively across the industry we need to collate more precise data to monitor the progress and effectiveness of our EDI efforts. Progress has been made, but we cannot afford to lose momentum.”
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