A critical juncture for EDI
13 December 2022
Caroline Escott, Chair, NextGen introduces the main findings of its recent report on inclusive working in the pensions sector.
The Pensions Regulator (TPR) has been leading the way on equity, diversity and inclusion (EDI) ever since its 21st Century Trusteeship initiative, and organisations like the PLSA and Aon have previously published reports on this issue. In 2021, the NextGen Research & Insights (R&I) Sub-Committee published its own contribution to the debate – Recruiting for cognitive diversity – which provided practical guidance to schemes, consultants and managers on how to create an inclusive recruitment process.
Despite these positive steps, 44% of respondents in a 2022 NextGen survey told us that the pensions industry is “only diverse at some levels,” with several respondents noting that junior roles are more diverse than the senior ones. And although we don’t have much recent data, anecdotal evidence indicates that not much has changed on trustee diversity at least.
In 2016, the PLSA found that 83% of trustees were male, while Aon’s survey from the same year indicated that 2.5% of scheme trustees were under 30, while 7% were over 70.
With these findings in mind, NextGen decided to shift the EDI conversation towards discussion of retention practices, recently launching a report on inclusion in the pensions sector.
Our thanks to many from NextGen and across the industry more broadly for their input, but particular thanks to the main authors of the NextGen report: Charlotte Bailey, Alex Burdekin, Hiral Mistry, Olivia Mooney, Jade Rigby and Paul Turrell, as well as to Lucy Kerley in her role as Chair of the NextGen R&I Sub-Committee and Emma Barry for designing the final report.
Retaining the ‘NextGen’
This report – Retaining the ‘NextGen’ – provides practical guidance on inclusive working practices for pension firms, using insights from individuals working in the industry as well as from pension schemes which are implementing EDI in their own organisations. Our guidance is also prefaced by a powerful foreword from David Fairs, Executive Director for Regulatory Policy, Analysis and Advice at TPR, who notes: “we need to attract broader talent to the world of pensions; we need to encourage change and ensure new voices are heard.”
To support us in producing guidance that would be genuinely helpful for the industry, NextGen’s R&I team extensively explored EDI issues with individuals from across the pensions sector. Findings included:
- Mixed views as to whether the industry is doing enough to attract and retain diverse talent. It was generally felt that progress was patchy, that there was more focus on gender diversity than other kinds, and that there are varying levels of genuine commitment to diversity – with some organisations solely “going through the motions”.
- A plethora of ideas on how to create an inclusive industry. These included better policies regarding flexible working and parental leave to ensure that work and life are well integrated, as well as gathering and publishing industry-wide EDI statistics and asking schemes to be more transparent about their strategies for change.
- Particular concerns about the lack of diversity at senior levels, including on trustee boards. Every single respondent to the NextGen survey said that diversity appeared to vary by role, including by seniority. Many responses indicated a sense that diversity is improving, particularly among consultancies – although trustee boards were often considered to be among the least diverse groups in the sector.
The NextGen team combined these insights with learnings from broader research on inclusive working practices, to come up with top tips for pensions organisations who are keen to become more inclusive and ensure every employee is given the opportunity to develop and thrive, regardless of background.
A call for change
Both TPR and the next generation of pension leaders are calling for change on EDI in our sector. Although there are some examples of positive progress, we all need to work to do our part in building inclusive organisations that allow individuals from all backgrounds to thrive. Only then can we build a sector which is diverse from top to bottom, and which is thereby better able to reflect – and respond to – the needs of diverse savers.
Inclusion ‘top tips’ for firms
Structured across what is a ‘typical’ journey for a new starter, our guidance suggests organisations consider the following:
- Designing the right culture. While the topic of workplace culture is too broad for NextGen to provide definitive answers, the important role of EDI training in supporting culture change is highlighted – as well as the additional benefits of making this training optional rather than mandatory.
- Onboarding. Onboarding effectively starts at the time an individual accepts a job offer, and culture and connections are key components to a successful onboarding process. We note that “a well-planned onboarding programme is a clear indication of the care that the company has taken to welcome a new recruit [and] invest in their talent”.
- Settling in. As well as outlining some of the benefits (and challenges) of a flexible working environment for different employees, there is advice for organisations on how to support employees in building both internal and external networks, both of which are vital for career development and personal growth.
- Career progression and promotion. We note that it’s impossible to overstate the importance of a defined and individually-tailored progression plan, while cautioning against making assumptions about someone’s career progression based on others’ wants/needs or the line manager’s own experience.
NextGen’s mission is to promote fresh ideas and new talent in the pensions industry. Our volunteers work hard to be a force for change and to take practical steps to overcome the barriers to building a diverse and inclusive sector.
Fundamental to this mission is our work supporting pensions organisations and senior decision-makers to understand the benefits of what is increasingly known as ‘EDI’ (Equity, Diversity and Inclusion) for their work and their working practices.