Effective trustee training has a key part to play in improving board diversity, drives better decision-making and improves governance say two trustees.
I lead stewardship and corporate governance work at one of the UK’s largest schemes, Railpen, and I am also a professionally accredited trustee at a DC master trust with around £6bn AUM. I’ve been a trustee for just under two years and am particularly involved in the board’s ESG, climate and stewardship work, as well as their focus on cybersecurity.
Although I am often still the youngest, and one of relatively few women in a room of my trustee peers at events, I think that progress is being made on diversity and inclusion (D&I). The Pensions Regulator’s (TPR) focus on D&I in its work on 21st Century Trusteeship is definitely helping in this regard and I look forward to seeing what else they do in 2022 as part of their ‘Year of the Trustee’. Evidence shows that more diverse groups of people make better decisions, as they are more likely to avoid behavioural biases such as groupthink; greater cognitive diversity can only be a good thing for scheme governance.
Equipping people who don't necessarily have 'the usual' pension trustee background with the knowledge and skills they need to be able to contribute effectively is fundamental to attracting and retaining diverse talent in the sector.
New or potential trustees need training and information which is up-to-date, accessible and creates a welcoming space for two-way dialogue and questions. The PLSA's education sessions and conferences tick all these boxes and I often recommend them to colleagues who are relatively new to the pensions industry.
I’m Co-Chair of the Association for Member-Nominated Trustees and also a Member-Nominated Board Member of the Church of England Pension Scheme.
It is very easy for trustee boards to appoint people who are just like them. Increasing D&I requires boards to see that they will be helped by a more diverse membership and that this is not just a box ticking exercise. Boards may benefit from training in behavioural issues and decision-making to help this process.
New trustees need to be persuaded that they can deliver in this role. They also need to feel that they will be supported and their developing skills appreciated by their employer. This especially matters if they are younger/more junior in an organisation.
One way to do the first part is encouraging potential trustees to work through the opening modules of the TPR’s Trustee Toolkit to reassure themselves about the level of learning required. This will also reassure the board selectors/electorate that the potential trustee understands the requirements.
Once appointed, the vital initial training for a new trustee covers how they should exercise their role, in and outside meetings; to know the right people to ask for explanation in advance of meetings to ensure they have a basic grasp of the issues under discussion; and to engage and ask questions at the meeting. (ie largely soft skills, but with a legal underpin). The aim of the training is to give the trustee confidence. The best and most insightful questions often come from those new to a subject, and the most powerful word is always “Why”.
A huge training hurdle at the very start of the process is off-putting – but so too is no training. Gradually working through the toolkit and specific scheme induction is key. A bonus that comes along with this is the chance to meet other trustees at a conference or seminar, so that supportive frameworks can be built.
New accreditation for lay trustees can be very helpful to give confidence that they actually do have skills and comparable knowledge to professional trustees, even though they probably do not come from a “pensions” background.
Find out more about the PLSA's trustee training programme