Independent trustees should be aware that the DWP has issued draft Regulations under s.36 of the Pensions Act 2004, via a limited consultation in line with policy on earlier draft Regs (see below). The existing Independent Trustee Regs (SI 1997/252, as amended) are to be entirely revoked.

Section 36 amends ss.22 - 25 of the Pensions Act 1995. It gives the Regulator power to appoint an independent trustee if the employer is insolvent, or if there is a Pension Protection Fund assessment period in relation to the scheme.

The Pensions Act 1995 requires an Insolvency Practitioner or Official Receiver to ensure that at all times there is an independent trustee in place. If there is not one in place they are required to appoint one. However, there is evidence to suggest that in practice an independent trustee is not always appointed.

Currently the only way to resolve the situation is for a member of the scheme to apply to the Court to force the Insolvency Practitioner or Official Receiver to appoint an independent trustee. In practice this does not happen very often because of the potentially prohibitive personal costs to the member. This section is intended to ensure that an independent trustee is appointed where required by empowering the Regulator, rather than the Insolvency Practitioner or Official Receiver, to make the appointment.

There have also been concerns expressed by the previous Secretary of State and several other Members of Parliament, as well as Opas, about the fees charged by independent trustees, especially when a scheme is in wind-up. This section helps to overcome these concerns by enabling the Regulator to decide whether an independent trustee appointment is appropriate, rather than requiring the Insolvency Practitioner or Official Receiver to appoint one in every case. The DWP expects this will do away with unnecessarily costly appointments and ensure that a trustee with the appropriate knowledge and skill is appointed.

The Regulator will have the power to opt to appoint a trustee under section 7 of the 1995 Pensions Act, which could be a member or other lay-trustee, rather than an independent trustee. The Regulator will also have the power to determine whether the employer, the scheme, or both, should meet the costs of any trustee (whether independent or not) that the Regulator appoints.

Section 36(4) states that Regulations must provide for the Regulator to compile and maintain a Register of persons who satisfy the prescribed conditions for registration as an Independent Trustee. Any independent trustee that the Regulator appoints under section 23 of the Pensions Act 1995 must be from the Register. The minimum criteria for inclusion on the Register is set out in the regulations. An independent trustee who is refused inclusion on the Register will have a right of appeal to the Pensions Regulator Appeal Tribunal.

The Regulations also require the appointed trustee to inform every member or relevant trade union of their name and address, in writing, within two months of their appointment; and on request, their fee scale and the fees actually charged to the scheme in the previous 12 months. Even prospective members will be entitled to this information.

At the same time the DWP is also consulting on a draft of The Pensions Act 2004 (Commencement Order No. 3*) and Pensions Regulator (Transitional Provisions) Order 2005. * You’ve not missed one: Commencement Order No. 2 is still in preparation

From 6 April 2005 the Pensions Regulator will be established and Opra will cease to exist; there will be no period where both bodies are in existence and functioning in tandem. A key policy objective is to make the transition as smooth, transparent and straightforward as possible. This Order is designed to help to achieve this objective.