The 70-year old scheme says its time to move from election to selection
TPT Retirement Solutions is set to scrap elections for member-nominated and employer-nominated directors (MNDs and ENDs) in favour of a “competency-based selection process”.
The multi-employer scheme – formerly the Pensions Trust – is consulting members over the change, which it said was necessary to make sure that trustees with the required skills were appointed.
In a letter sent to members, the organisation added that a turnout of less than 10% for most elections showed these were not an “effective way of engaging members and employers” in the appointment process.
TPT said it was important for members and employers to remain involved in the process but the p would strengthen its governance structure.
Pension schemes are becoming increasingly complex and trustees are under more pressure than ever
Head of trustee services Karen Parry said: “Pension schemes are becoming increasingly complex and trustees are under more pressure than ever from growing regulation, low interest rates and increasing deficits.
“TPT recognises this and is reviewing its appointment process and further strengthen its governance structure as part of the organisation’s strategy to be a leading defined benefit consolidator.”
Under the proposed new system, all members and employers will still be eligible to nominate candidates and members will be able to put themselves forward.
Nominees will be required to submit an application form to a five-person appointment panel – including the trustee chair, and at least one MND – that will decide which candidate to appoint.
Commenting on the proposed changes, Trades Union Congress policy officer Tim Sharp said member-nominated trustees reduced the risk of group-think and acted as important links to the membership.
The advantage of election is that it opens the way for a wide range of scheme members
“The greater the diversity of trustees, the greater these benefits,” he said. “The advantage of election is that it opens the way for a wide range of scheme members to participate and can engage the wider scheme membership.”
Sharp said that alternatives to election could be appropriate for some schemes, but that it was important for schemes to avoid excluding mem by inappropriate criteria.
“Introducing a knowledge or skills test for applicants could easily narrow the range of applicants to become member-nominated trustees in a way that would be detrimental to scheme members,” he said.
“The best way of ensuring the quality of MNTs is to have enough applicants for positions so that the workforce has a genuine choice of representative.”