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Don’t let’s shy away from diversity

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Diversity is the new buzz word in pensions. It’s one of those concepts that it is very easy to talk about, but so much easier to overlook.

Diversity in all walks of life is essential – society is all the better for it. Different ideas, different backgrounds, different experiences, different generations; throw them all into the melting pot and you will end up in a more rounded, sophisticated place. The alternative, it seems to me, is a very grey, stagnant environment where the status quo prevails, and new ideas not only are quashed, but dangerously, are not even thought of in the first place.

So, what relevance is this to a board of pension scheme trustees? I would argue it’s highly relevant. Lack of understanding and general apathy from pension scheme members are huge challenges for everyone. We only need to look at the large proportion of DC members who sleepwalk into the default fund–hoping that this will somehow fund their retirement–to see this. We need to be doing absolutely everything we can to improve member understanding, explaining issues more clearly and generally making ‘pensions’ more engaging. Technology clearly plays a part here, as does financial education, both for today’s savers and tomorrow’s.

However, having a diverse and representative trustee board will also help overcome these challenges. Members need to feel represented in order to feel engaged. We need to be thinking of new ways to encourage more people to become trustees. Whilst accepting the basic requirements of the role and the need for commitment in terms of time, knowledge, and energy, it is so important that we make efforts to break down the barriers and the preconceived views that seem to exist out there. This needs to be a joint effort between existing trustees, employers, advisers, the regulatory community, schools, and generally the industry as a whole. Accepting the point that a diverse board will be more representative of its members, this will then lead to a better run scheme and potentially better member outcomes in retirement.

Experience is something that I have not mentioned so far, and I have often heard said, can outweigh the benefits of diversity. In no way am I suggesting quotas or forcing diversity in place of highly experienced trustees. But, what I am saying, is that a balance is needed. Diversity, in whatever guise, is not something that should be shied away from. It is important and should be embraced. This will not be something that happens overnight, it will be a journey, and one which we are all responsible for promoting.

 

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