Why we need more young trustees and how to make this happen

I recently watched my colleague Simon Lewis’ trustee diversity and inclusion (D&I) podcast with Hymans Robertson (part of their popular PITStop series). It got me thinking about age diversity, how the pension industry can attract younger pension trustees and whether trustee perceptions need to change.

While anyone over 18 can become a trustee, it’s usually a role taken by older and more experienced people. According to the Pensions and Lifetime Savings Association, 83% of pension trustees are men, one third are over 60 and only 2.5% of scheme trustees are under 30.

Attracting younger trustees is important to better reflect society and wider scheme membership, but perhaps blame for the lack of younger trustees lies at the feet of both the pensions industry and young people themselves. Working in pensions is unlikely to be at the top of most graduates’ wish lists because few understand what the industry is about. Change that understanding to reflect what the role of a professional trustee, for example, actually involves and pension careers could become as sought-after as other financial roles.

Better promotion of the fantastic opportunities a role in pensions governance provides is a must for companies recruiting graduates. For example, I’ve been surprised and interested by the diverse range of people my governance role has enabled me to meet and learn from. I’ve gained valuable insight into a range of companies, their attitudes to risks and rewards, how they govern themselves and their pension schemes and so much more. I’ve also gained a greater awareness of the role of auditors, legal advisers, actuaries and investment advisers, and what their diverse professions do.

The industry needs change too

Treating trusteeship as a team service provides a pathway for young people to experience and understand the role. Onboarding people into trusteeship is perhaps easier now than ever. There are excellent resources on The Pension Regulator’s website for helping people learn about trusteeship and the needs of pension schemes. I’m also currently studying with the Pensions Management Institute (PMI) and definitely recommend PMI qualifications. Developing young people, whether in a supporting role or all the way to becoming a trustee is, in my opinion, essential to keeping the industry current.

Next year we’ll see increased governance requirements in the form of The Pension Regulator’s proposed single code. This will require pension trustee boards to adopt a comprehensive set of written policies and be able to demonstrate they have an ‘effective system of governance’. Introducing fresh new minds to pension schemes during such a change is a perfect opportunity trustee boards should not waste.

Opportunity is present in both the sole corporate trustee and full trustee board space. Young pension professionals can drive the need for strong governance and ensure existing trustees have a good understanding of when and why changes are coming. Fresh experience is needed to meet the challenges pensions schemes face. This is the ideal environment to develop young talent and provide strong support for schemes.

I know Simon feels the trustee role doesn’t scream dynamism, energy and new ideas

I found it interesting to hear from Simon’s perspective, given he’s been in pensions for 24 years. He believes it's incumbent on those who’ve been in the industry for some years to break down stereotypes and not put limitations on who can add value. This means not discriminating by age and encouraging younger people to become trustees.

Although defined benefit (DB) pension scheme clients want to see a track record of competence and experience, this should be dovetailed with clear succession planning and training so new people can be introduced when new projects arise or as key support. Professional trustees can introduce younger talent with less (but rapidly building) experience to clients through a team-based approach.

At PSGS, we have a diverse range of people with skills and experiences in different areas and our clients see the value and benefit this brings. For instance, younger people tend to be very engaged and committed, with a sharp eye for member communications and key governance areas such as environmental, social & governance issues (ESG) and D&I. A good firm will harness this enthusiasm.

In the defined contribution (DC) scheme and master trust world, there are more obvious way to use the experience and skills from a younger person - engaging members better. They can help to influence language and tone of member communications, advise on how to engage members of different ages and understand how technology can be used effectively.

Younger people can also present a positive challenge to existing older trustees to keep up to date and current and learn new skills!

How to attract and retain younger talent:

• Revise the recruitment approach and the language used to engage - select a mix of people to interview candidates and make sure there are role models to look towards.
• Challenge the talent pipeline – for example, do new recruits need to be graduates and are current requirements a barrier to attracting a wider talent pool?
• Give younger team members a voice – ask for their opinion and give them ownership on clients and internal work streams.
• Provide exposure to commercial work - virtual meetings are a great way to introduce more team members so they can learn about board dynamics and have a chance to show their ability.
• Ensure a good onboarding and appraisal system is in place and working well.

Ultimately, if pension trustees don’t evolve, they’ll soon find themselves out of step. We must support new talent coming into the industry and make good use of a mix of skills and mindsets.

 

 

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