Member Nominated Trustees

All defined benefit pension schemes and some money purchase pension schemes have to be run by Trustees. A member nominated trustee (MNT) is a trustee who has been either elected by the scheme’s members or appointed by a process independent of the sponsoring employer, for example being selected by the current Trustee body or selection panel.

MNT rules were first introduced in 1997 to give pension scheme members a say in the selection and appointment of Trustees. 

Those rules were amended with effect from April 2006. The law now states that at least one-third of the trustees should be MNTs.  If there are 10 trustees, this means that at least four of them must be MNTs. 

Under the original rules, the employer was allowed to choose whether to opt-out and make arrangement not to have MNTs, or ask the trustees to make arrangements for MNTs to be appointed.  However, this opt-out was withdrawn when the rules were changed last year.

It is the responsibility of the trustees to make arrangements for the selection of MNTs.

If the employer had previously decided to opt-out of having MNTs altogether, the trustees have until 31 October 2007 to implement the new changes. 

There are a couple of stages to the MNT appointment process.

Firstly, the trustees must ask, at least, the active and pensioner members for nominations.  A member can nominate any other scheme member s/he believes would be fit to act as a trustee of the scheme.  The nominated person must give his/her consent.

Then, the trustees must put in place a selection process.  This may be an election process which should involve the active and pensioner members but there may be a selection process of a combination of the two. 

The trustees of several large schemes have already put selection processes in place.  Some have included a Trade Union Official on the selection panels.

If the election route is being used, details of the nominated persons are put to all the scheme members.  The members are asked to vote for whom they believe are fit to act as trustees.  Those with the highest number of votes are then elected as MNTs.

If there are unfilled vacancies, the Trustees must make arrangements for a new nomination process to be carried out no later than three years after the failed process.

If there are fewer nominations than vacancies, the trustees must choose whether to bypass the selection process and just appoint those nominated.  If there are unfilled vacancies, the trustees must make arrangements for a new nomination process to be carried out no later than three years after the failed process.

The MNT appointment process, once completed, must be reviewed by the trustees every three to five years.

The DWP is considering changing the MNT requirement to one-half instead of one-third. 

What does this mean for Usdaw members?

Many of the companies we deal with will be reviewing their Trustee arrangements during 2007.

Schemes will be calling for members to become Trustees. Contact the Pensions Section at Central Office if this is happening in your scheme.

If you want more information about becoming a Trustee contact the Pensions Officer at Central Office

For more information visit the Pension Regulator Code of Practice

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© 2003 (USDAW) Union of Shop, Distributive and Allied Workers
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