Appendix 2

NORTH YORKSHIRE COUNCIL

PENSION BOARD

CONFLICTS OF INTEREST POLICY

Introduction

There is a requirement for Pension Board members not to have a conflict of interest. However, it

is important to note that the issue of conflicts of interest must be considered in light of the

Pension Board’s role, which is to assist the Administering Authority. The Pension Board does

not make decisions in relation to the administration and management of the Fund: this rests with

the Administering Authority. As a result, it is not anticipated that significant conflicts will arise in

the same way as would be the case if the Board were making decisions on a regular basis

(compared, for example, to the Pension Fund Committee). Nevertheless, steps need to be

taken to identify, monitor and manage conflicts effectively.

The Regulator has a particular role in relation to members of the Pension Board and conflicts of

interest. Whilst members of the Pension Board may be subject to other legal requirements when

exercising functions as a member of the Pension Board, the Regulator expects the

requirements which specifically apply by virtue of the Public Service Pensions Act 2013 to be

met and the standards of conduct and practice set out in its Code of Practice to be complied

with.

The Code of Practice offers guidance about managing potential conflicts and the identification,

monitoring and management of actual conflicts. This Policy is intended to reflect the principles

of the Regulator’s Code of Practice and apply them in an LGPS context.

Identifying conflicts of interest

For the purposes of a member of the Pension Board, a ‘conflict of interest’ is defined in section

5(5) of the 2013 Act as a financial or other interest which is likely to prejudice a person’s

exercise of functions as a member of the Pension Board. The 2013 Act also specifies that a

conflict does not include a financial or other interest arising merely by virtue of that person being

a member of the LGPS.

Therefore, a conflict of interest may arise when a member of the Pension Board must fulfil their

legal duty to assist the Administering Authority and at the same time they have:

a separate personal interest (financial or otherwise); or

another responsibility in relation to that matter, giving rise to a possible conflict with their

first responsibility as a Pension Board member

The Regulations place a duty on the Administering Authority to satisfy itself that those appointed

to its Pension Board do not have an actual conflict of interest prior to appointment and “from

time to time”.

There is a corresponding duty on any person who is proposed to be appointed to the Pension

Board, and on an appointed member of the Pension Board, to provide the Administering

Authority with such information as the Administering Authority reasonably requires to be

satisfied that there are no conflicts of interest. Pension Board members also have a

responsibility to anticipate potential conflicts of interest in relation to plans for future Pension

Board activity.

Some examples of how a conflict might arise specifically in relation to a member of a Pension

Board include:

a finance officer appointed as a member of the Pension Board may, from time to time, be

required to take or scrutinise a decision which may be, or appear to be, in opposition to

another interest or responsibility. For example, they may be required as a member of the

Pension Board to take or scrutinise a decision which involves the use of departmental

resources to improve scheme administration, whilst at the same time being tasked, by

virtue of their employment, with reducing departmental spending;

a Pension Board member who works in the Administering Authority’s internal audit

function may be required as part of his work to audit the Fund. For example, the

employee may become aware of confidential breaches of law by the Fund which have

not yet been brought to the attention of the Pension Board;

an employer representative from the private sector may also have a conflict of interest as

a decision-maker in their own workplace. For example, if an employer representative is

drawn from a company to which the Administering Authority has outsourced its pension

administration services and the Board are reviewing the standards provided by it.

Conflicts of interest may also arise in respect of advisers to the Pension Board. For example, an

adviser may have a conflict of interest if he or she (or the same firm) is also advising the

Administering Authority. The risk to the Pension Board is that the adviser does not provide, or is

not seen to provide, independent advice. Where there is likely to be a conflict of interest in

giving advice, the Board should consider carefully whether it is appropriate to appoint the

adviser in the first place. It may also be necessary to consider carefully whether they should

take steps to remove an adviser who has already been appointed.

Monitoring and Managing potential conflicts of interest

In order for the Administering Authority to fulfil its obligation to ensure that members of the

Pension Board do not have a conflict of interest, the Pension Board must include an item on

conflicts of interest at each meeting of the Pension Board and in its annual report to the

Administering Authority.

The Pension Board is required to maintain a written register of dual interests and responsibilities

which have the potential to become conflicts of interest, which may adversely affect members’

or advisers’ suitability for the role. Each member of the Pension Board (as well as any other

attendees participating in the meeting) will be expected to declare, on appointment and at each

meeting, any interests which may lead to conflicts of interest. Such a conflict could be in relation

to a general subject area or to a specific agenda item of a Pension Board meeting.

The Chair of the Pension Board must be satisfied that the Board is acting within:

the conflicts of interest requirements of the Public Service Pensions Act and the LGPS

Regulations, and

in the spirit of any national guidance or code of practice in relation to conflicts of interest

for Pension Board members, and

Each member of the Pension Board, or a person proposed to be appointed to the Board, (as

well as attendees participating in the meeting) must provide the Chair of the Pension Board with

such information as he or she reasonably requires for the purposes of demonstrating that there

is no conflict of interest.