The OPA calls on TPR to be proactive in monitoring and spreading best practice principles in the governance of occupational pension schemes.
The OPA believe that the principles laid out in the 2004 Pensions Act of:
proportionality, fairness and transparency
in the nomination and selection processes for Member Nominated Trustees/Directors are being ignored in some schemes, despite being emphasised in TPR's Code of Practice – "MNT/MND – putting arrangements in place". An example of "unfairness" provided there being where a constituency on 100 members nominates 2 MNTs whereas a constituency of 10,000 members nominates only 1.
The OPA is aware that many trustee boards amongst its members' schemes appear to be completely ignoring this code and indeed an individual member has formally complained to the Regulator about a MNT selection process in his scheme in which less than 1000 members of one constituency select 3 trustees and 10,000 select just one. TPR's response was that the Codes of Practice have in fact no legal force and therefore TPR can take no action on this issue. Even after lodging a formal complaint TPR confirmed its intention to take no action.
The OPA believes that TPR should be seen to be actively encouraging conformance of its Codes of Practice and not turning a blind eye simply because it lacks legal enforcement powers.
The requirement for recognition of pensioners' organisations by trustee boards is also being widely ignored (see MNT survey) and again TPR is apparently taking no action. OPA lobbied successfully to have the 2004 Pensions Bill amended on both these issues and is therefore very disappointed to find that these measures can apparently be ignored with impunity.
That said the OPA congratulates the Pension Regulator on its excellent record so far. We are particularly pleased to note TPR's intentions detailed in its Corporate Plan for 2008-2011 on regulating DB schemes, including its increased focus on longevity assumptions, and the proposal for increased powers in buy-outs by unregulated private equity institutions that could represent "unacceptable levels of risk to pension scheme members and the PPF". Any future Corporate Plan should however include an emphasis on the implementation of best practice principles concerning corporate governance, particularly the two above issues.
|
|
The Pensions Regulator’s Code of Practice on MNTs
Para 61 says: “Trustees may decide to use constituencies in the nomination process (for example, by site, by category of member, or by section of the scheme). In considering the use of constituencies, trustees should have regard to the principles of proportionality, fairness and transparency. For example it would not, in general, be fair for a constituency of 100 members to nominate two MNTs, and a constituency of 10,000 members to nominate only one.”
A survey reported in TPR’s corporate plan also showed that 19% of schemes admitted to recruitment problems – compared to 15% in 2007. (A more recent surveycommissioned by the TUC found only 12% reporting recruitment problems.)
Could these few problems be due to the fact that pensioner members are not being invited to become a trustee, we ask?
|
|
