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Pensions Act 2004

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Changes over time for: Cross Heading: Requirements for member-nominated trustees and directors

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Status:

Point in time view as at 31/12/2023.

Changes to legislation:

Pensions Act 2004, Cross Heading: Requirements for member-nominated trustees and directors is up to date with all changes known to be in force on or before 06 March 2025. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

Requirements for member-nominated trustees and directorsE+W+S

241Requirement for member-nominated trusteesE+W+S

(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.

Modifications etc. (not altering text)

Commencement Information

I1S. 241 in force at at 1.11.2005 for specified purposes and 6.4.2006 in so far as not already in force by S.I. 2005/2447, art. 2(5), Sch. Pt. 2

242Requirement for member-nominated directors of corporate trusteesE+W+S

(1)Where a company is a trustee of an occupational trust scheme and every trustee of the scheme is a company, the company 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 directors of the company to be member-nominated directors, and

(b)that those arrangements are implemented.

(2)“Member-nominated directors” are directors of the company in question 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 occupational trust scheme or an organisation which adequately represents the active members, and

(ii)all the pensioner members of the occupational trust 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 that scheme.

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

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

(b)in the case of a company 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 directors 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 director,

(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 director, 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 director requires the agreement of all the other directors.

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

(8)Where the same company is a trustee of two or more occupational trust schemes by reference to each of which this section applies to the company, then, subject to subsection (9), the preceding provisions of this section have effect as if—

(a)the schemes were a single scheme,

(b)the members of each of the schemes were members of that single scheme, and

(c)the references to “the employer” were references to all the employers in relation to the schemes.

(9)Where, apart from this subsection, subsection (8) would apply in relation to a company, the company may elect that subsection (8)—

(a)is not to apply as mentioned in that subsection, or

(b)is to apply but only in relation to some of the schemes to which it would otherwise apply.

(10)This section does not apply in relation to an occupational trust scheme if the scheme is of a prescribed description.

(11)If, in the case of a company which is a trustee 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 the company.

Modifications etc. (not altering text)

C2S. 242 power to apply (with modifications) conferred (26.11.2008) by Pensions Act 2008 (c. 30), s. 149(2), Sch. 1 para. 1(6)

Commencement Information

I2S. 242 in force at 1.11.2005 for specified purpose and 6.4.2006 in so far as not already in force by S.I. 2005/2447, art. 2(5), Sch. Pt. 2

243Member-nominated trustees and directors: supplementaryE+W+S

(1)The Secretary of State may, by order, amend sections 241(1)(a) and (4) and 242(1)(a) and (4) by substituting, in each of those provisions, “one-half” for “one-third”.

(2)Regulations may modify sections 241 and 242 (including any of the provisions mentioned in subsection (1)) in their application to prescribed cases.

(3)In sections 241 and 242—

  • company” means a company [F1as defined in section 1(1) of the Companies Act 2006] or a company which may be wound up under Part 5 of the Insolvency Act 1986 (c. 45) (unregistered companies);

  • occupational trust scheme” means an occupational pension scheme established under a trust.

Textual Amendments

Commencement Information

I3S. 243 in force at 1.11.2005 by S.I. 2005/2447, art. 2(2)

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