Agenda item

Report of the Director of Finance and Assurance.

As agreed at the October 2021 meeting and in preparation for the implementation of the Good Governance Review in 2022, the Board received a report on two of the Pension Fund policies – namely the Conflicts of Interest Policy and the Breaches Policy - and sought comments and suggestions from Members.

During the discussion that ensued the following points were raised with respect to each of the two policies:

Conflicts of Interest

1)              Responding to a question on the format of the Conflicts of Interest Policy and how it reconciled with the Council’s Declarations of Interest Policy (DOI), the Board was informed that the former was an overarching policy which set out the definitions of a conflict of interest, the situations where conflicts may arise and the principles which would be applied in managing those appropriately.  Given that the Council had a dual role – as an administrative authority for the LBH Pension Fund and as a local authority for the area - it was important to ensure that the elected members who sat on the Pension Fund Committee (PFC) represented the interests of the PF rather than the Council as the local authority.  The DOI on the other hand related more to members’ personal interests and were declared as part of the governance process.

2)              The Board commented that with some Pension Funds going heavily into surplus it expected added pressure from employers to reduce employer contributions without considering the overall position of the Fund, which in turn could lead to a potential conflict of interest.

3)              A Member commented that the Council had to be mindful of, manage carefully and where applicable avoid the appointment of members who had a dual role or were involved in bodies responsible for the management of council’s finances;

4)              The Board noted the involvement of the Chair of the PFC in the London Collective Investment Vehicle (CIV) and asked whether this should be taken into consideration as it could lead to a potential conflict of interest between Harrow and the CIV.  In fact, as the LBH Pension Fund is one of the shareholders of the London CIV, the Chair’s role was to be the shareholder’s (ie the LBH Pension Fund’s) representative at the CIV’s General Meetings of its shareholders.

5)              Conflict of interest was also dependent on the level of understanding of Pension Board and PFC Members’ roles and commitment to ensure that the Fund’s liabilities were covered by its assets.  This could be problematic especially in the context of climate change and zero carbon targets where a conflict between breaching net carbon and investment return may occur.

6)              The Board suggested that a statement prompting the individual if in doubt to seek advice on potential conflicts of interest be added to the main policy;

7)              Referencing page 69 of the report, a Member commented on the “unenviable” position in which the Director of Finance was put by being directly named thereby placing significant responsibility for which they had no statutory authority.  Instead it was suggested that the wording be amended replacing “Director of Finance” with “Section 151 Officer, in conjunction with the Head of Paid Service and Monitoring Officer” instead.

Breaches Policy:

The interim Pensions Manager introduced the policy stating that the document presented to the Pension Board as part of the agenda for this meeting was the same as what was last approved at the end of 2016 and was currently in operation.  Breaches were reported on a quarterly basis with none identified in recent years.

In noting that the Board itself had a role in reporting breaches, even if they were its own and referred them to the Monitoring Officer, Members noted the Breaches Policy and did not raise any further comments.

RESOLVED:  That the Report be noted and that the Conflicts of Interest Policy and Breaches Policy be recommended to the Pension Fund Committee.