Published by Danny Wilding on
Estimated reading time: 3 minutes
One key common theme was that Pension Scheme Trustee Chairs are looking for an increasingly diverse range of skills for their trustee board in the future, with 60% of Chairs agreeing that there is insufficient diversity of age, ethnicity and gender amongst trustees currently and 38% believing there are not enough new trustees entering the profession currently.
In recruiting future trustees, it will be helpful that 72% of Chairs believe trusteeship presents attractive future development opportunities. It will also be helpful that we see a trend of increasing trustee remuneration, with compensation having increased by 3.3% per annum in real terms since 2015 as shown by the chart below, and with 93% of Chairs expecting this to be maintained or to rise further in future:
The key to greater diversity could be the gender pay gap within trusteeship (with the women Chairs surveyed currently commanding somewhat higher average remuneration than their male counterparts) as well as the wide range of professional backgrounds from which Trustees are currently drawn, as shown in the following chart:
It should also be helpful that there appears to be a very wide range of professional backgrounds from which trustees are currently drawn, including:
Consumer Services; Retail; Telecommunications; Transport; Healthcare; Financial Services; Technology; Industrials; Consumer Goods; Utilities; Higher Education; Construction; Charities and not for profit.
For those aspiring for their first trusteeship post, it is worth noting that completion of the Pension Regulator’s Trustee Toolkit, is the entry qualification most often required by Chairs as shown below:
Chairs are conscious of needing to tackle the ongoing challenges of regulatory change (seen as a key challenge by 49% of Chairs), volatile investment performance (seen as a key challenge by 29% of Chairs) and employer covenant (seen as a key challenge by 14% of Chairs). They also recognise the need to balance high-level strategic issues, such as de-risking and endgame planning, with getting the detail right, such as regulatory compliance and GMP equalisation. They also need to balance traditional work for example, as member engagement alongside more contemporary work, such as managing cyber risks, as shown below:
With such a broad range of challenges and priorities to face in the years ahead, it is understandable that Chairs clearly believe their trustee boards will be more effective by working as a balanced team of people with a range of skills.
I believe this is particularly important for trustees of DC and hybrid schemes that are open to benefit accrual, as well as a minority of DB schemes still in that position. This is due to the memberships of these schemes continuing to evolve over time as new, younger members join the schemes. New members will not necessarily have the same requirements or outlook for their retirement planning as longer serving members. Trustees’ communication channels need to keep up with the times, as well as needing to reflect on the changing relationship between employment, family life, leisure and retirement for younger generations.
In light of all this, the 2019 Chairs are right to call out the need for greater future diversity of their trustee boards as they manage the UK’s future retirement funds.