Thinking about EDI as part of board effectiveness
National inclusion week is a great opportunity for pension managers and trustees to remind themselves that The Pensions Regulator (TPR) expects pension schemes to demonstrate best practice around equality (we prefer the use of equity), diversity and inclusion (EDI). But why is EDI important, and how could a board effectiveness review make sure EDI best practice is achieved and utilised by your trustee board?
Why is EDI important to trustee boards?
Studies show that diverse company boards outperform their less diverse competitors. In an environment where making good decisions is important for achieving the best outcomes for pension scheme members and their benefits, it’s easy to see how this fact applies to diverse trustee boards. TPR believes that more diverse boards lead to:
- wide discussion encouraging new thinking and approaches
- more effective decision-making that reflects member needs and values
- improved value for money for savers
- deeper understanding of issues that have a real-life influence on savers’ outcomes
- better decision-making that impacts quality of life for a wide range of individuals
- greater understanding, insight and empathy for scheme beneficiaries on things like discretionary death benefits and ill health decisions
- improved communications with scheme members
How can a board effectiveness review help with EDI on your trustee board?
Reviewing EDI on your scheme shouldn’t be scary and isn’t meant to catch trustees out. Instead, an EDI review can help trustee boards to become more effective by helping them to better understand various elements of EDI on their scheme, including any views and policies they already have, and how the trustee board’s approach aligns with the sponsoring employer.
But EDI reviews can also mean looking at things more broadly, focussing on inclusion – such as considering what viewpoints and skills are missing on the trustee board, as well as how confident individual trustees feel in bringing new ideas to the table. Identifying and addressing any issues found by an EDI focused review can help make existing trustees become more effective.
What’s more, EDI focused reviews can give boards and pension managers things to consider when appointing new trustees (and the support they might need) or employing external advisers and seeking a broad range of cognitive diversity. In this way, reviewing regularly and effectively can help with succession planning too.
How can reviewing EDI benefit communication goals to members?
Considering EDI is also key to the effectiveness of the trustees’ communications to members. It’s important that trustee boards understand the make-up of their scheme’s membership and whether those members require specific adjustments to the way their communicated with to get the most out of their benefits. This could include exploring how retirement options are presented to members and made understandable, something that will become increasingly important as decumulation options increase. Multi-media approaches should be considered to reach as many members as possible.
Putting it all together
When reviewing your EDI policies, it’s important to take steps that are practical for your trustee board and your pension scheme. Conducting an EDI focused board effectiveness review can help find where gaps are in policies, whilst keeping any adjustments proportionate to your scheme. Discussions amongst the trustee board sparked by a review can make sure that trustees stay accountable and effective, whilst employing and updating policies so that they benefit the operation of the scheme and its membership.
Our range of board effectiveness surveys can help make sure your trustee board is performing at its best, including when considering EDI. To learn more, you can download our service flyer or get in touch.
