Master trust boards have shown positive strides in achieving gender diversity but they often lack representation in other significant aspects relevant to their scheme membership, according to LCP.
The trustee boards that govern the pension plans were studied as part of LCP’s look into the major master trusts operating in the UK workplace pension sector. The study found that trustee boards are significantly less reflective of scheme membership in several important ways and were found to be racially and ethnically unrepresentative of the general community.
According to LCP, only 2 per cent of trustees are from a minority ethnic background, and 98 per cent are white. In comparison, the 2021 census revealed that only about 82 per cent of people in England and Wales identified as being of “high level” white ethnicity.
Meanwhile, LCP’s analysis also found that almost half or 46 per cent of the trustees in master trusts are women, which is higher than the percentage of women on FTSE 350 company boards. This gender balance is similar to the proportion of women in the membership of a typical master trust, such as NEST, where 47 per cent of the members are women.
LCP DC and Financial Wellbeing Team principal John Reid says: “It is welcome to see a good gender balance on the boards of master trusts, but much more needs to be done when it comes to other aspects of diversity. Although members will want to see good levels of experience on trust boards, there is a risk that if trustees are typically much older than members, they may not fully see issues through the eyes of their younger members.
“Similarly, there may be issues of particular importance to scheme members from ethnic minority groups which will not be fully appreciated by an overwhelmingly white board. As trustee board membership evolves, more attention will need to be given to these wider aspects of diversity.”
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