While the majority of UK pension trustee firms endorse diversity, equity and inclusion (DEI), slow progress in recruiting talent is cited as the most common challenge to the effective implementation of DEI strategies for the pensions industry.
Research from New Mallowstreet, commissioned by Cardano, found that nearly half of 120 surveyed pension funds and professional trustee firms in the UK have now implemented DEI strategies, a substantial rise from 26% in 2022.
A further 28% of schemes and professional trustee firms have established specific DEI targets, an increase from 11% reported in 2022.
Despite progress over the last year, significant barriers remain to the effective implementation of DEI strategies.
The research highlights recruitment as the most common challenge, with nearly half (46%) of pension professionals citing the failure to attract diverse talent as a primary barrier to improving DEI.
According to the report, social and gender inclusivity has improved. People who attended state schools are well represented on the majority of trustee boards (46% of trustees work at schemes where at least 80% of the board attended state schools), while 21% of respondents work at schemes where at least 40% of board members are women, up from 17% in 2022.
However, respondents acknowledge the need for greater efforts to attract a more diverse range of talent, especially from underrepresented groups such as neurodiverse individuals, minority ethnic backgrounds, or people with disabilities.
The data also reveals that the industry needs to consider succession planning.
More than two in five (44%) sponsor or member-nominated trustees have spent more than a decade in their role. In contrast, over half (55%) of professional trustees have spent three years or less in their current role.
Cardano said that addressing these recruitment dynamics will be essential to foster a more inclusive and diverse landscape within pension schemes and trustee firms.
The absence of comprehensive diversity data also poses a significant risk to the effective measurement of DEI and the progress of initiatives across the pension industry, according to Cardano as per its research, more than one in three (34%) pension schemes do not collect any diversity data on members at all.
Among those that do, the focus is often limited to basic characteristics such as age (59%), gender (43%), and marriage or civil partnership status (42%). This data deficit extends to professional trustee firms where less than half (36%) collect DEI board statistics.
One in three (33%) respondents highlighted the difficulty in measuring DEI, underscoring the need for improved data collection practices to support meaningful evaluation and progress within the industry.
Gillie Tomlinson, head of trustee engagement at Cardano, said that despite positive momentum over the year, there remains a substantial and persistent DEI gap that requires attention.
She said: “Succession plans should look to prioritise [DEI], and we need a concerted effort to attract diverse talent across the industry.”
Tomlinson pointed out that The Pensions Regulator’s (TPR) guidance published last year sets out several alternative approaches schemes can adopt, like staggering the turnover of roles.
She noted that incorporating measures such as knowledge transfer, mentorship programmes and career development pathways can also help bring about a more inclusive pensions landscape.
She continued: “It is also essential to recognise that effective management hinges on accurate measurement.”
The TPR’s survey was a “crucial exercise” to help the industry have a better understanding of trustee diversity, she said, however, the industry needs to collate more precise data to monitor the progress and effectiveness of DEI efforts.
“Progress has been made, but we cannot afford to lose momentum,” she said.