A member writes: The 1995 Pensions Act described how Member Nominated Trustees (MNTs) might be selected. It allowed companies to opt-out of using those methods (and the requirement for 1/3 of trust boards to be member nominated) provided agreement was reached with the scheme members. The 2004 Act describes which trustees have the status of MNTs by describing how they are to be selected. (The process is not described in detail, but salient characteristics of the process are described.) The 2004 Act does not allow opt-out. A timetable exists for when trusts must put replacements for opt-outs into effect - see panel.

For some reason that is not obvious, at least one legal firm interpreted the
2004 Act as saying that methods which had been used under the opt-out from the 1995 Act could substitute for the methods in the 2004 Act, so that existing MNTs could maintain their status as MNTs even when the new law about what constitutes an MNT was in play. The Pensions Regulator has confirmed that this is not so - existing MNTs are not barred from being trustees when the new law is in play, but they do lose their status as MNTs.

This is important because of the rule that 1/3 of trustees should be member nominated. Trustees who were elected as MNTs (usually for a prospective three years) are now finding that they will shortly not be MNTs. Further, if they remain on the trustee board they will make it necessary to have more MNTs selected (under the new process) so as to meet the 1/3 rule.

OPA suggests that all associations should look carefully at when their trustees will be implementing the 2004 Act, whether their current trustees include some MNTs selected under opt-out, and what the plans are to ensure conforming with the 1/3 rule.

See also: TPR's Guidance on MNTs

MNT Regulations Summary:

• Existing opt-out arrangements are allowed to continue until they would normally expire or 31 October 2007 whichever is the earlier
• The nomination and selection process will normally take place within 6 months of the MNT arrangements being put into place.
• They are to be nominated in a process in which at least all the active and pensioner members or organisations which adequately represent them can participate, and be selected as a result of a process which involves some or all of the scheme members.
• The Government intends to work towards implementing the 50% MNT requirements sometime in 2009. Also independent trustees will be disregarded in the calculation of the 50% minimum.