Peter Askins says we need more diversity on trustee boards.
This is the second in a series of articles on 21st century trusteeship from the perspective of a professional trustee. The first looked at issues affecting member nominated trustees and Trustee Knowledge and Understanding while this article looks at the demographics of trustee boards.
The main characteristics of pension fund trustees are that they are mostly white middle class males and generally aged over 60. Does this matter? The answer is yes!
You may have seen that the BBC is adopting recruitment policies that probe applicants' socio-economic background. While that may be considered to be extreme, if the main function of trustees is to protect the beneficiaries' interest, it is axiomatic that there should be some connection between the two groups.
Given that half the work force is female it seems inescapable that a preponderance of men over 60 is unlikely to be tuned in to the issues affecting women in the workplace.
In the eyes of many the typical trustee board is seen as "Pale, Male and Stale." I qualify on two counts, and while many trustees will be offended by such a description – the facts are the facts.
As a professional trustee I attend a lot of industry events and it is increasingly apparent that for many trustees the issues affecting members who may be 30 or even 40 years younger than them and of the opposite sex are a different country. This is particularly true in the DC world.
Diane Day, an ITS client director based in Leeds who specialises in DC schemes, says: "As a trustee of DC schemes, one of my key challenges is to encourage members to contribute as much as they can, as early in their working life as they can. How can trustees get these messages through effectively unless they have a good understanding of, and empathy with, their members? This is especially the case with the millions of first-time DC pension members under auto-enrolment. Diversity of age, gender, skill set and experience in the trustee board mix is more likely to result in more effective communication strategies – leading to better member outcomes."
Janine Wood, a client director in Manchester, is a former pension consultant who has transitioned to professional trusteeship. She sums up her experience of being a woman in a defined benefit (DB) world as follows: "Diversity of trustees in a DB context is less driven by the need to understand their members' mind sets but more by having the ability to negotiate the increasingly complex world of DB schemes nowadays. It is essential to have the balance of skills, views and experiences brought by a diverse trustee board, to be open-minded to the new risk management solutions available to DB schemes, while bringing an appropriate level of challenge and debate."
Increasingly, trustees are either approaching the end of their working lives or have crossed over into retirement or semi-retirement. As a group they are part of a generation that has had advantages and experiences wholly different from the current working generations. Many are wedded to what some consider outmoded ideas of how people should live their lives and the provision they should be making for later life. Many are stuck in a DB world mind set that is far removed from the everyday experience of today's working population.
If the trustee model is to prosper it is vital that trustee bodies become more diverse. This means younger people, particularly women, being encouraged to take on the role of trustee. The Pensions Regulator is consulting on a draft guide to The Trustee Board on page 9 of which it sets out a raft of factors in relation to the diversity of trustee boards. It is an interesting read.
What do you think? There is an opportunity to discuss these issues in the 'Pensions Prophets' session at Pensions and Benefits UK at the QEII Centre on 28 June.
Peter Askins is director at Independent Trustee Services
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