The Pensions Regulator

Working with trustees

As an employer, you will need to liaise with trustees in a number of areas. Some of the most important aspects of the employer/trustee relationship are described below.

Training and support

Where scheme trustees are also your employees, you must give them sufficient paid time off during working hours to:

• carry out their duties as trustees; and
• undertake trustee training.

Trustees must be able to demonstrate that they have the knowledge and understanding required to carry out their role effectively. This may impact on the amount of support and training trustees will need.

Funding

Most schemes that provide any defined benefits need to meet a statutory funding objective, which assesses the required levels of funding for a scheme (this replaces the minimum funding requirement).

As an employer, you will need to work closely with trustees to ensure that your scheme meets these funding requirements. In particular, you will have to agree with the trustees:

• a statement of funding principles; and
• a schedule of contributions consistent with these principles.

Where the statutory funding objective is not met, you have to agree on a recovery plan setting out the steps that will be taken to put things right.

The Pensions Regulator has issued a code of practice on funding defined benefits.

Member-nominated trustees

Trustees are required to ensure that arrangements are in place, and implemented, that provide for at least one-third of trustees, or at least one-third of directors of the trustee company, to be member-nominated.

Employers are no longer able to 'opt out' of the requirements for MNTs and MNDs. Although an opt-out in place on 5 April 2006 can remain in place until the earlier of:

• the date members' approval of the opt-out ceases;
• the date the trustees or employer bring the opt-out to an end;
• 31 October 2007.

Until the opt-out ends trustee arrangements are governed by the terms of the opt-out. So if, for example, a trustee resigns, the trustee is replaced under the terms provided for in the opt-out.

Once the opt-out ends the new requirements will apply to a scheme from that date.

Employers must give their consent if the proportion of MNTs or MNDs is to be greater than one-third and the rules of the scheme do not provide for it.

Employers will also need to decide whether they will require their consent to be given for non-members to be selected as MNTs or MNDs.

The guidance for trustees tells you more about the responsibilities of trustees in putting arrangements in place.

Making changes to the scheme

If you're considering making changes to the pension scheme, there are some factors that you must discuss with the trustees: see amending your scheme for details.