The 2004 Pensions Act made it obligatory that one third of the Pension Scheme Trustees should be Member Nominated and that by 2009 this level was to be increased to 50%. There are now disturbing signs that government is now cooling on the proposal.

James Purnell, Secretary of State for Work and Pensions said in a speech to the TUC on 27th June '08, "I want to speak on the issue of our commitment to 50% member nominated trustees. We stand by the commitment. However given the ever greater demands on trustees we need to ensure that they have the greater understanding, expertise and technical competence necessary to fulfil their role.Therefore I want to commission some formal research into these issues, so that we can see what impacts would be of getting more MNTs. We will continue to move towards delivering on the commitment, but need to do so in way that is safe, in line with concerns expressed by the Pensions Regulator."

In other words there will at the very least be a considerable delay to the introduction of 50% by 2009 and at worst the committment may be kicked into the long grass.

The TUC responded has signalling that unions are to step up their campaign for trustee boards to be made up of 50 per cent member nominated trustees (MNTs)

As reported in Pensions Week (4/8/08) the OPA has weighed in on the call for the government to honour its commitment to introducing 50% MNTs.

It is important that the research is carried out by an independent and impartial research organisation rather than an industry or regulatory body, in order to ensure the most accurate and impartial responses possible. To date we regret that the OPA, as a principal stakeholder, has not been invited invited to contribute to this DWP research.

At present scheme administrators appear to be unnecessarily limiting the numbers of trustees drawn from the pensioner membership even though these in many cases now constitute the greater majority of scheme membership in closed schemes. Pensioner members often have both the time and commitment to acquire the knowledge and understanding required to fulfil the task whereas active members may well find it arduous and interferes with their main work.

Roger Turner, said: “The Pensions Regulator needs to encourage  schemes to end needless restriction of the franchise of pensioner members in accordance with its Code of Practice which requires the selection process to be fair, transparent and proportionate”. More..

In the interests of best practice for scheme governance the OPA would also like to see an independent chairman appointed to trustee boards whenever it was appropriate for the scheme size.

Facts:

• About 24% of pension schemes already have 50% MNTs
• Only 12% of schemes have reported recruitment difficulties.

Source: The member voice in pensions governance - Independent research for the TUC by IQ Research, July 2008

Meanwhile the NAPF is saying:

"The current requirement that 1/3rd of trustees be member nominated is, we believe, the right balance. We do not see any gain in increasing the number of Member Nominated Trustees (MNTs). Some employers fear that increasing the number of member nominated trustees may result in them losing some control over the decision making process around the design and benefit structure of their pension. This is particularly important for those employers operating in a competitive labour market."

Well, they would say that, wouldn't they? However that's no reason for Purnell to go back on this commitment.