Member-nominated trustees – recent changes

United Kingdom

As a result of a delay to the implementation of the new member-nominated trustee regime contained in the Child Support, Pensions and Social Security Act 2000, the Government have introduced interim regulations that amend the existing regime. These regulations came into force on 6 October 2002.

The Pensions Act 1995 introduced the requirement that at least one-third of the trustees (or the directors of corporate trustees) should be member-nominated. Trustees were required to put in place their own arrangements for the nomination and selection of member-nominated trustees. These had to be approved by the membership under a statutory consultation procedure and lasted six years. Where trustees did not propose their own arrangements, regulations contained prescribed rules which would apply in default. Alternatively, the employer could opt out of the statutory regime and propose their own arrangements. The opt-outs also had to be approved by the membership under the statutory consultation procedure and also lasted for six years.

The Child Support Act contains a number of changes to the existing regime. In particular, when it comes in to force, it will remove the ability of employers to opt out of the requirement for a scheme to have one-third of its trustees nominated by the members. The implementation of these new provisions has been delayed pending the outcome of the Pickering Review.

Amendments

The new Regulations extend the period of any employer arrangements and trustee rules in place prior to 6 October 2002 from six years to ten years. In addition, from that date employers can propose new arrangements as long as they have the consent of the trustees. Any new arrangements being made after the commencement of the regulations remain subject to the existing statutory consultation procedure and will only be valid for four years.

These interim regulations may well be superseded in due course by the implementation of the relevant provisions of the Child Support Act. In the letter that accompanied the draft regulations, the Department of Work and Pensions stated that where: "the outcome of the simplification review means that we can proceed with the original proposals, we may well implement the new requirements within a shorter timescale".

For further information please contact James Frankland on +44 (0)20 7367 2944 or at james.frankland@cms-cmck.com