Pensions Act 2004

241Requirement for member-nominated trustees

(1)The trustees of an occupational trust scheme must secure—

(a)that, within a reasonable period of the commencement date, arrangements are in place which provide for at least one-third of the total number of trustees to be member-nominated trustees, and

(b)that those arrangements are implemented.

(2)“Member-nominated trustees” are trustees of an occupational trust scheme who—

(a)are nominated as the result of a process in which at least the following are eligible to participate—

(i)all the active members of the scheme or an organisation which adequately represents the active members, and

(ii)all the pensioner members of the scheme or an organisation which adequately represents the pensioner members, and

(b)are selected as a result of a process which involves some or all of the members of the scheme.

(3)The “commencement date”, in relation to a scheme, is—

(a)the date upon which this section first applies in relation to the scheme, or

(b)in the case of a scheme to which this section has ceased to apply and then reapplies, the date on which the section reapplies to it.

(4)The arrangements may provide for a greater number of member-nominated trustees than that required to satisfy the one-third minimum mentioned in subsection (1)(a) only if the employer has approved the greater number.

(5)The arrangements—

(a)must provide for the nomination and selection process to take place within a reasonable period of any requirement arising under the arrangements to appoint a member-nominated trustee,

(b)must provide, where a vacancy is not filled because insufficient nominations are received, for the nomination and selection process to be repeated at reasonable intervals until the vacancy is filled,

(c)must provide that where the employer so requires, a person who is not a member of the scheme must have the employer’s approval to qualify for selection as a member-nominated trustee, and

(d)subject to paragraph (c), may provide that, where the number of nominations received is equal to or less than the number of appointments required, the nominees are deemed to be selected.

(6)The arrangements must provide that the removal of a member-nominated trustee requires the agreement of all the other trustees.

(7)Nothing in the arrangements or in the provisions of the scheme may exclude member-nominated trustees from the exercise of functions exercisable by other trustees by reason only of the fact that they are member-nominated trustees.

(8)This section does not apply in relation to an occupational trust scheme if—

(a)every member of the scheme is a trustee of the scheme and no other person is such a trustee,

(b)every trustee of the scheme is a company, or

(c)the scheme is of a prescribed description.

(9)If, in the case of an occupational trust scheme, the arrangements required by subsection (1)—

(a)are not in place as required by subsection (1)(a), or

(b)are not being implemented,

section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any trustee who has failed to take all reasonable steps to secure compliance.