Any other business: Low voter turnout has plagued many elections. As the famous apocryphal quote from US politics runs, “A low voter turnout is an indication of fewer people going to the polls”.
This astute observation has variously been attributed to US presidential and vice presidential hopefuls alike, including Al Gore and George W Bush – with the latter's presidential battle in 2000 becoming famously surrounded by controversy.
MNTs: the basics
Under the Pensions Act 2004, a third of an occupational pension scheme trustee board must be made up of member-nominated trustees.
The Pensions Regulator produces a code of practice for schemes looking to appoint MNTs, requiring a process that is fair, proportionate and transparent.
There is no requirement for members to vote but there must be a nomination and selection process. Schemes usually have one of the following processes:
A selection process managed by the scheme;
An election by the members from a shortlist.
While member-nominated trustee appointments may not be surrounded with talk of 'hanging chads' and 'pregnant chads' – will leave you to Google that one – the debate of election versus selection still rages.
Trust-based schemes are required by law to have at least a third of their board nominated by scheme members and this can done through either an election or selection process.
Lynda Whitney, partner at Aon Hewitt, said the consultancy had seen more elections than selections, but sometimes as part of the election process nominees are required to meet with the pensions manager to ensure they know what the role entails.
“Elections are seen as the fair way to [appoint trustees] with no controlling clique,” she said. Selection can be used if a particular skillset, such as communicating with members, is needed.
Barry Parr, co-chair of the Association of Member Nominated Trustees, said that in a survey of their members from last year, around three-quarters were elected and the remainder appointed through a selection process.
Parr observed there has been a definite move towards more selection. “Selection can bring more diversity to the trustee board,” he said. “There is more of a push for racial and gender diversity.”
The cheaper option
One reason for the move towards selections is the costs associated with elections, at a time when many schemes are trying to reduce costs. "Elections are something [pension managers] don’t look forward to running,” said Whitney.
Changes in technology are also allowing schemes to hold the process electronically for active members, which could also drive down the cost of elections. However, getting enough people to vote can be a challenge.
Voter turnout can be a tricky area. “There is always a concern about the level of apathy with pensions,” said Whitney, adding that she did see more engagement among members approaching retirement.
Kevin LeGrand, head of pensions policy at Buck Consultants, came down on the side of selection, pointing out that voter turnout for elections can be very low.
Through the selection process, the scheme is trying to find the best fit. The trustee board is trying to find someone that works well with and fits in with the group, he said.
LeGrand added that often individuals have put themselves forward without realising what the job entails, and will pull out of the process after meeting with the trustee board and realising the ins-and-outs of the role.
“If it had been a straightforward election, they wouldn’t have found out they didn’t want the job until after the election,” LeGrand said.
However, when there is a small, or non-existent, number of people nominating themselves, existing trustees will often ask individuals to put themselves up for the role. This can lead to an informal selection, even if an election is being held, Whitney said.
