UK - The Pensions Regulator (TPR) has been urged not to "turn a blind eye" over the enforcement of member-nominated trustee (MNT) requirements simply because it has no legal powers, the Occupational Pensioners' Alliance (OPA) has claimed.

Results of an online survey examining the implementation of the MNT requirements - which state at least one-third of trustees must be nominated by members - showed 44% of respondents already have 50% MNTs.

The UK government had previously confirmed it would raise the minimum level of MNTs to 50% by 2009, however the OPA has expressed concerns that the government may be "wavering" in its commitment.

It claimed comments by James Purnell, secretary of state for work and pensions, commissioning "more formal research" to understand the impact on trustee understanding and competence suggest "there will at the very least be a considerable delay to the introduction of 50% by 2009 and at worst the commitment may be kicked into the long grass". (See earlier IPE article: Gov't wants 'formal' research into 50% MNTs)

However, the poll of 32 member organisations showed although almost half had reached the 50% target, 32% did not think the MNT arrangements for their pension scheme were "fair, transparent and proportionate" and in accordance with TPR's code of practice.

Instead, the OPA claimed "many trustee boards amongst its members' schemes appear to be completely ignoring this code", and highlighted an example where an individual member complained to TPR about the selection process in the scheme.

In this instance, it was claimed representation was disproportionate as the 1,000 active members of the fund selected three trustees, while the 10,000 pensioners were only able to select one.

However, the OPA claimed TPR was unable to take action as the Codes of Practice have no legal force, but the organisation argued TPR should be encouraging compliance and "not turning a blind eye simply because it lacks legal enforcement powers".

The survey findings also suggested deferred members are being marginalised as only 33% of respondents involve deferred members in selection, while overall active members are involved in 84% of selections despite representing just 18% of the overall membership of respondents.

The survey also suggested there is a "striking difference" in the governance arrangements of the schemes, such as the size of the trustee board, composition and the appointment of the chairman, as only 19% of respondents admitted to choosing an independent chair.

As a result of the survey findings, the OPA recommended the requirement for 50% MNTs should be implemented "without undue delay", and argued an independent chairman should be appointed to trustee boards where the size of the scheme makes it justifiable.

The organisation has also called for fairer treatment to all classes of member, except where there is a good reason to protect minority interests, which includes inviting deferred members to take part in the nomination of MNTs.

In addition, the OPA claimed: "The principles of proportionality, fairness and transparency should be actively policed by TPR and not, as presently is the case, totally ignored because the codes of practice have no legal force".

TPR pointed out while the regulator's code of practice gives guidance to trustees about how they might comply with the legislation, Paragraph 5 of the code "makes clear that the code itself is not a statement of the law, that trustees are free to use alternative ways of complying with the law".

However, in a statement it said "any alternative approach to that appearing in the code of practice will need to meet the underlying legal requirements, and a penalty may be imposed if those requirements are not met".

In cases where there is perceived to have been a breach of the law TPR said it had the ability to "take action", and a failure to comply could result in a "fine of up to £5,000 in the case of an individual and £50,000 for anybody else".

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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