Member-nominated trustees and directors
- Most schemes will be required to have a minimum of one third member-nominated trustees or directors.
- Employers will no longer be able to “opt out” of having member-nominated trustees.
- The legislation will be much simpler than now, backed by guidance from the Regulator.
Find out more about The Pensions Regulator. - There will be more scope for trustees to adopt arrangements that suit their scheme.
- The Act contains a power to increase the minimum proportion from one third to one half at some time in the future.
Background
The Green Paper proposed to –
“reduce the level of prescription on selection process for member-nominated trustees so that legislation focuses on the outcome to be achieved – at least one-third of trustees should be member-nominated – and not as now on the detailed processes that schemes must follow to achieve that outcome.”
The current proposals carry forward the policy initiated in response to recommendations of the Goode Report in 1993, which resulted in member-nominated trustee and director requirements for occupational pension schemes being introduced under the Pensions Act 1995.
The requirements provide for at least one third of the trustees to be member-nominated trustees (MNTs), or member-nominated directors (MNDs) where the trustee is a company. The employer can, however, propose alternative arrangements which will be adopted if approved by the members through a statutory consultation procedure.
Changes to underpin the policy further, and remove the employer’s right to propose alternative arrangements, were enacted in the Child Support Pensions and Social Security Act 2000 (CSPSS Act), but commencement was postponed pending the outcome of the Pickering review.
While supporting the basic principle of a minimum 1/3rd MNTs, the Pickering Report highlighted MNTs as an area of the present legislation that is ripe for simplification. Pickering noted that member participation is “an area of law that can be reduced to a clear set of principles” where the focus can be changed from prescriptive process to broad outcome. Currently, trustees are hampered by prescriptive time bound processes that prevent them adopting arrangements that suit the circumstances of their scheme.
During the passage of the Bill, the Government introduced a power to raise the minimum proportion of MNTs from one third to 50% at some time in the future, to give members greater involvement and confidence in running their scheme.
Read the Pickering report (224KB) 
in our Publications section.
- Find out more about the Government's pension reform plans.