View from the PLSA
In the world of corporate governance it’s a well-established fact that company boards which reflect a wider range of voices are less prone to group think; and there’s compelling evidence that companies which have this diversity of thinking are more successful.
Pension scheme investors have long made it clear that they expect to see more diverse boards and management teams running the companies they invest in, to protect and grow the value of savers’ money. If cognitive diversity makes sense for companies, then it also makes sense for pension schemes.
However, the pensions industry still has some way to go on this front. The average pension trustee is 54 and PLSA research from the Breaking the Mirror Image report showed that 83% of pension trustee boards are male. At a time when the pensions industry is undergoing a period of rapid policy, regulatory and technological change, it’s vital that those making the decisions take a flexible approach which benefits from incorporating different perspectives.
This is why the PLSA is actively supporting NextGen and other fantastic industry initiatives – such as TPR’s young trustee network – aimed at encouraging fresh perspectives and thinking. Although cognitive diversity is about much more than just age, ensuring younger voices are represented at every level of the pensions industry is key to a sector which can better reflect the needs of younger savers in a post-auto-enrolment world.
The PLSA is also trying to walk the walk. It has recently committed to having at least one session on what a modern, diverse pensions industry looks like at each of its major conferences. Indeed its most recent annual conference saw a group of young pension trustees discuss how trustee boards can encourage younger people to get involved, while a keynote from the economist Noreena Hertz explained how Generation K (those aged 15 to 24) can be encouraged to save. Furthermore, the PLSA has also created a regular diversity column in its Viewpoint member magazine and is actively working to ensure a mix of backgrounds and perspectives (including age and gender) on all of its policy committees.
There’s a lot of good work going on to challenge and change the status quo but as an industry there is a great deal more we can do. Pension schemes have been at the forefront of encouraging companies to think and work harder about what they are doing to encourage fresh, diverse thinking. We need to continue to apply this energy and attitude to the behaviour and make-up of own industry too.