Employees could be given the power to veto changes to company pension schemes under proposed legislation announced at last month’s Conference of the Trades Union Congress. Alan Johnson, the secretary of state for work and pensions announced that the Pensions Bill would include a new power requiring at least half of pension scheme trustees to be nominated by its members. This originally stood at 33%.
This would effectively give trade unions and employee representatives the power to veto employers’ actions on issues such as benefits cuts. The new power would be enforced if employers did not voluntarily go beyond the bill’s minimum requirement and allow more than a third of trustees to be nominated by members.
Jay Sheth, senior policy adviser at the Confederation of British Industry, predicted that the moves would not necessarily have a negative impact on employers.
Trustees are obliged not to act in a representative manner, so employees would not automatically gain the power of veto. “[We would hope] all members of trustee boards will act with discretion and judgement regardless of [their] background,” explained Sheth.
He added that while some have already filled their quota of member-nominated trustees, those that haven’t may experience some difficulty. Many [CBI members] are already suffering from a trustee shortage. [We need] measures that will encourage [trustees] to come [forward].”