That ‘tumble weed’ moment after the dispatch of your carefully worded letter and scheme information, the fading of the closing date into history, and the empty tray where the Member Nominated Trustee (MNT) applications should be is an all too familiar feeling.
Where, you might think, have all the MNTs gone?
Similar to many endangered species, there are simply less of them. Back in 2004 when the Regulator first required Schemes to elect 1/3rd of Trustees from the membership of the Scheme, the majority of DB trust-based schemes in the UK were open to new members and to future accrual. Fast forward to 2021 and fewer than 13% of DB schemes accept new members and around 50% (and counting) are also closed to future accrual.
Couple this with significantly increased trustee duties and regulation, we begin to see the problem. In the current economic climate with employees worried for their full-time positions and employers with their focus shifted away from their legacy DB schemes – the MNT habitat is under pressure.
But all is not lost, for the first time, the Pensions Regulator has acknowledged the relationship between Diversity and Inclusion and good governance on trustee boards. In February 2020, it pointed to “clear evidence that diverse groups make better decisions”. As David Fairs, has noted, “The current lack of diversity and lack of role models for different characteristics must be a barrier and influence those who would [otherwise] be prepared to put themselves forward”.
In the words of the PLSA, diversity can make decision-making uncomfortable because it should result in ‘creative conflict’. It is far easier to work in an environment where people are the same as us because we are drawn to the familiar. Diversity challenges people, and if you accept that it leads to better decision-making, then the MNT process is an ideal opportunity for a Trustee Board to embrace change.
Our 7 Top Tips to finding your MNTs:
Start now – don’t wait until you need a new MNT.
Deepen the pool – if the Trustee has drawn up their own MNT recruitment policy don’t make it harder than you have to. Is your MNT policy still appropriate to your scheme and its membership? Have you excluded some categories of members? (deferred are most commonly excluded), has your scheme changed? (closed to accrual for example).
Change the process – consider moving to a selection process. The most common thing you may be doing to scare off your precious potential MNTs is decreeing an election process. Research shows that an election process is less inclusive and favours the status quo, making it less attractive for those not already represented and making it more difficult for ANY members who are not in contact with their fellow members.
Sell the benefits – in recent TUC research members quote many reasons why they don’t wish to be a Trustee; boring, complicated, risky, are just some of them. Yet existing MNTs often say how interesting and enjoyable they have found the role. Stress the benefits of exposure to senior company directors and senior employees, experience of Board level decision making, strategic thinking … all of this can look really good on a CV – so tell them about it!
Use the right language – make it clear that a financial background is not always required – tailor what you are asking for to the kind of business your sponsor is in – customer care experience, HR and people management can be just as useful as being the FD or the ex-FD!
Use interesting media and inclusive imagery – this is a great time to freshen up the approach and move away from sending a letter and some scheme documentation to your eligible members. Other communication channels are a way of diversifying to attract more candidates. Videos by existing Trustees about the rewards of the role, use of intranets etc. all have their place. Make sure you use inclusive imagery; the perception may be that pension trustees are old white men – show your members they don’t have to be.
Consider payments – the amount MNTs are remunerated over and above expenses varies widely. If you are expecting a substantial time commitment and struggling to recruit, it’s worth thinking about – just be careful not to make the role professional…
Attracting quality MNTs should be achievable and is an excellent place to start thinking about the evolution of a Board. The next step may well be candidate selection and how to structure the interview stage, but that’s for another day.