Member Nominated Trustees (MNTs)
References to MNTs in the section also apply to Member Nominated Directors (MNDs).
A member nominated trustee (MNT) is a trustee that has been voted into position by some or all of the scheme’s members. The original rules were introduced on 6 April 1997 to give members a say in the selection and appointment of trustees. Those rules were amended with effect from 6 April 2006.
Under the original rules, the employer had 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 However, the opt-out option was withdrawn when the new rules were introduced on 6 April 2006.
If the employer had previously decided to opt-out, the trustees have until 31 October 2007 to implement the new changes. If the second option had been chosen, the trustees will have to put the new rules into place with effect from 6 April 2006.
The new rules state 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. Some schemes may have special provisions that require more that one-third to be member nominated.
The trustees must make arrangements for the selection of MNTs within six months of the ‘effective date’. The effective date is 6 April 2006 for existing schemes without an opt-out, 31 October 2007 for existing schemes with an opt-out and the inception date for all new schemes.
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 he believes would be fit to act as a trustee of his scheme. The nominated person must give his consent.
Then, the trustees must put in place a selection process. Either, a selection committee decides or, if a ballot is arranged, details of the nominated persons are put to all the eligible 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 thereby elected as MNTs.
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.
For reference, the DWP is considering changing the MNT requirement to one-half instead of one-third.
- By when does a scheme have to comply with the MNT requirements?
The trustees must make arrangements for the selection of MNTs within six months of the ‘effective date’. The effective date is 6 April 2006 for existing schemes without an opt-out, 31 October 2007 for existing schemes with an opt-out and the inception date for new schemes.
- Can a MNT be removed from the Board of Trustees?
The removal of an MNT can only be carried out with the approval of all other trustees.
- Are MNTs limited to certain roles?
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No. MNTs will have the same responsibilities of all other trustees.
- What happens with a Corporate Trustee?
Where a company is a trustee, then the requirement to have one-third MNTs becomes a requirement to have one-third member nominated director (MNDs). The provisions applying to MNTs are the same for MNDs.
Q & As
