The Chief Finance Officer submitted a report to provide draft policy documents in relation to how the Teesside Pension Board would operate and report to the Scheme Manager.
Regulation 5 of the Public Sector Pensions Act places a requirement on the Scheme Manager to be satisfied that a person appointed to be a Member of the Teesside Pension Board did not have a conflict of interest and to be satisfied from time to time that none of the members of the Board have a conflict of interest.
A copy of the proposed Conflict of Interest Policy was attached at Appendix A to the report. The Policy set out the principles which the Members of the Board would be expected to follow in order to fulfil their legal obligations under the Public Service Pensions Act 2013, in identifying, monitoring and managing potential, actual or perceived conflicts of interest. The report provided a definition of a conflict of interest and detailed examples of potential conflicts for illustrative purposes.
Regulation 108 of the 2013 Regulations requires that:
Each administering authority must be satisfied that any person to be appointed as a member of a local pension board does not have a conflict of interest.
Section 5(5) of the 2013 Act defines a conflict of interest as:
A financial or other interest which is likely to prejudice the persons exercise of functions as a member of the board (but does not include a financial or other interest arising merely by virtue of membership of the scheme or any connected scheme).
The 2013 regulations allow for elected members to sit on a Local Pension Board, and under the Localism Act 2011, all elected members would be covered by and subject to their own local authority's Code of Conduct. The Pensions Regulator had published guidance in the form of a Code of Practice which included guidance for Scheme Managers to assist in meeting their legal duty in ensuring that Local Pension Board members did not have a conflict of interest.
Guidance on dealing "Confidential Information" where a Member of the Board considered that the information could:
a) adversely affect the Teesside Pension Fund or an employer within the Fund;
b) reasonably cause the TPB to interpret a decision by the Teesside Pension Fund and Investment Panel differently or act in a different way were it to be known at the time, and
c) the information was not available to the TPB through some other means within such time as the Board was able to fully act upon it,
stated that the TPB member should withdraw from all discussion in relation to that issue and notify the Board that a conflict of interest existed. The details of the conflict did not have to be disclosed. An example given was where a Board member was aware of legally confidential negotiations, for example, the takeover of a Fund employer which could radically alter the business and have a knock on effect on its participation in the Fund or the size of its liabilities.
The Policy Objectives of the TPB included:
1. To ensure that all members of the Teesside Pension Board comply with their statutory requirements under the Public Service Pensions Act 2013 and associated regulations and guidance.
2. Ensure that all Teesside Pension Board members are aware of their duty to act independently and carry out their roles to a high ethical standard.
3. Remove any perception that the actions of the Teesside Pension Board members are influenced by the presence of a separate responsibility or interest that conflict with their responsibilities as a Board member.
4. Maintain appropriate records of declared conflicts of interest and manage any potential conflicts to ensure they do not become actual or perceived conflicts of interest. Records will be lodged in advance of the Board Members appointment and will be maintained by Middlesbrough Councils Monitoring Officer.
5. Ensure that public confidence in the governance of the Teesside Pension Fund is maintained.
An overview of the roles of the following was provided in identifying and monitoring conflicts of interest:
Individual Members of the TPB;
The Administering Authority; and
It was highlighted that in the event that the TPB considered that a potential conflict of interest could become an actual or perceived conflict in respect of one or more of its members; the Board must determine the most appropriate mechanism for managing that conflict. The approach taken would depend on the nature and extent of the potential conflict. Details of examples of possible methods of managing potential conflicts were included within the report.
The TPB would receive support and advice from officers of the Fund with regard to its day to day business. The Board, if appropriate, could also seek independent or professional advice including governance or legal advice.
In order for the TPB to be confident that any advice received from officers or advisers was independent and in the best interests of the Fund, any officer or adviser providing advice to the Board was required to declare any situation where a potential, perceived or actual conflict of interest existed, to enable the situation to be appropriately managed.
In terms of the receipt of Gifts and Hospitality by any of the Board members, the Board would be expected to adhere to Middlesbrough Council's Gifts and Hospitality Policy.
AGREED that the Conflict of Interest Policy as included within the report, be approved.
A copy of the proposed policy for Training and Knowledge and Understanding of the Local Pension Board of Middlesbrough Council was attached at Appendix B to the report.
The Board was advised that Knowledge and Understanding must be considered as part of the role of the Board to assist the Administering Authority in line with the Board's Terms of Reference. The Board was required to establish and maintain a Knowledge and Understanding Policy and Framework to address the knowledge and understanding requirements of all of the Board members as required under Section 5 of the Public Service Pensions Act 2013 and regulation 106 of the Local Government Pension Scheme Regulations 2013 (as amended).
An outline of the key requirements in terms of Knowledge and Understanding of the TPB was outlined within the report. Members were required to be conversant with:
a) the rules of the scheme;
b) any document recording policy about the administration of the scheme which was for the time being, adopted in relation to the scheme;
c) the law relating to pensions; and
d) any other matters which were prescribed within the regulations.
The degree of the knowledge and understanding required must be appropriate for the purposes of enabling the Board member to properly exercise the functions required of a member of the TPB.
TPB members were required to complete the Pension Regulators Public Service Toolkit within three months of being appointed to the Board, and evidence of completion of this training was required to be provided to the Board's Governance Officer, for training record purposes. In addition, Board members were required to complete any additional content, or amendments, within one month of the Pension Regulator announcing any such change.
Each Board member was expected to attend at least 50% of all training courses provided to the Board, within a twelve month rolling period. It was highlighted, that if a Board member had undertaken equivalent, alternative training then this could count as attendance at a planned session; this would however be determined by the Chair of the Board.
The Teesside Pension Fund website would include an area specifically dedicated to the TPB which would include links to documentation or information which may be required by Board members as part of their Board role.
The costs of attending any external training courses would require approval by the Scheme Manager prior to attendance at the course. A record of all training undertaken by Board members would be maintained by the Scheme Manager.
A list of the Scheme documentation that Board members were required to be conversant with, was included within the report. A review of Board members training needs would be completed on an annual basis by individual Board members. Where additional training needs were identified, with the agreement of the Scheme Manager, suitable training would be arranged within a reasonable time, but within the next 12 month period as a minimum.
The Knowledge and Understanding Policy would be reviewed on each material change to those parts of the Regulations covering knowledge and understanding of local pension boards or upon relevant issuance of codes of practice by the Pensions Regulator, and at least every three years.
AGREED as follows:
1. That the Knowledge and Understanding Policy as included within the report be approved.
2. That the Policy be reviewed on each material change to those parts of the Regulations covering knowledge and understanding of local pension boards or upon relevant issuance of codes of practice by the Pensions Regulator, and at least every three years.
A copy of the proposed Constitutional Procedures in respect of the Local Pension Board of Middlesbrough Council was attached at Appendix C to the report.
In terms of the Data Protection Act and Information Security, the Board would adhere to the Data Protection and Information Security policies of the Administering Authority. Copies of the policies would be made available to Board members and they would be notified of any subsequent changes to the policies.
The report included details on the reporting procedure to be followed by the Board and other responsible parties such as managers of the scheme, any other person involved in the administration of the scheme, employers, professional advisers including auditors, actuaries, legal advisers and fund managers and any other person involved in advising the Scheme Manager in relation to the scheme; in respect of reporting any suspected breaches of law to the Pension Regulator.
In terms of the Board's Financial Policy, the Board would, on an annual basis, agree an annual budget based on the assessed potential costs required to undertake their duties as Board members for the coming year. The proposed annual budget would be required to be submitted to the Scheme Manager for approval. Any subsequent changes to the agreed budget would require the approval of the Scheme Manager on a case by case basis prior to any undertakings that could lead to costs being payable.
Initially, it was proposed that Board members would be paid £100 per meeting, up to a maximum annual allowance of £1,200. Attendance at training courses would be classed as a meeting. This allowance would be reviewed from time to time by the Scheme Manager. The Scheme Manager would also have the option not to pay fees for certain duties and this could also be reviewed from time to time.
Board members would be required to follow the Middlesbrough Council Expenses Policy in place for co-opted members in terms of claims for travel and subsistence.
AGREED that the Constitutional Procedures as included within the report, be approved.