national conference on public employee retirement systems ncpers code of conduct for service...
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National Conference on Public Employee Retirement SystemsNational Conference on Public Employee Retirement Systems
NCPERS Code of Conduct for Service Providers
National Conference on Public Employee Retirement Systems
National Conference on Public Employee Retirement Systems
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Session PresentersHank Kim, Esq.NCPERS executive director & counsel
Stuart Kaufman, Esq.Partner, KKJ&L
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National Conference on Public Employee Retirement Systems
Agenda
• Why and how of the Code of Conduct for Public Pension Service Providers
• Overview of the Code of Conduct• What is Schedule A?• Should fiduciaries adopt the Code of
Conduct?• What should public pensions do?• Q&A
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National Conference on Public Employee Retirement Systems
Genesis of the Code of Conduct
• Began about a year ago at an NCPERS executive board meeting
• Objective is to disclose and limit conflicts of interests
• General trend in this regard• DOL Definition of Fiduciary; Conflict of
Interest Proposed Rule
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National Conference on Public Employee Retirement Systems
CFA Code of Professional Conduct
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NCPERS Code of Conduct
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NCPERS Code of Conduct1. Act in a professional and
ethical manner at all times in dealings with public plan clients.
2. Act for the benefit of public plan clients.
3. Act with independence and objectivity.
4. Fully disclose to public plan clients conflicts of interest that arise that may impair the ability to act independently or objectively.
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NCPERS Code of Conduct5. Act with reasonable care, skill,
competence, and diligence when engaging in professional activities.
6. Communicate with public plan clients in a timely and accurate manner.
7. Uphold the applicable law, rules, and regulations governing your sector and profession.
8. Fully disclose to public plan clients all fees charged for the products or services provided to said client.
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NCPERS Code of Conduct
9. Not advocate for the diminishment of public defined benefit plans.
10. Fully disclose all contributions made to entities enumerated in Schedule A that advocate for the diminishment of public defined benefit plans.
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National Conference on Public Employee Retirement Systems
Major Pension Enactments2009-2014
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AFT Asset Managers List
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National Conference on Public Employee Retirement Systems
TEXPERS DB Support
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National Conference on Public Employee Retirement Systems
Schedule A Annual Process
1. May/June NCPERS sends out request to NCPERS Member Funds asking for input. We ask for name of entity, website, and examples of Schedule A five point criteria.
2. Staff reviews the submissions from Funds. We document the supporting examples and prepare Schedule A entities for the NCPERS Executive Board.
3. NCPERS Executive Board reviews Schedule A entities. The Executive Board votes to approve Schedule A list at the July Executive Board Meeting.
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National Conference on Public Employee Retirement Systems
Schedule A Criteria Advocates that public defined benefit plans are
unsustainable. Advocates for a defined contribution plan to replace the
public defined benefit plan. Advocates for a poorly designed cash balance plan to
replace the public defined benefit plan. Advocates for a poorly designed combination plan to
replace the public defined benefit plan. Links school performance evaluation to whether it
sponsors a defined benefit plan to its teachers/employees.
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National Conference on Public Employee Retirement Systems
Inaugural 2015 Schedule A List
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Inaugural 2015 Schedule A List• American Enterprise Institute• American Legislative Exchange
Council• Brookings Institution • California Common Sense• California Policy Center• Heritage Foundation• Howard Jarvis Taxpayers Association• Jessie Ball DuPont Fund• Laura and John Arnold Foundation• Manhattan Institute for Policy
Research• Massachusetts Taxpayers
Foundation• National Council on Teacher Quality
• Pioneer Institute• R Street Institute• Reason Foundation• Show Me Institute• StudentsFirst• Taxpayers for Sustainable
Pensions• Teacherspensions.org• Texas Public Policy Foundation• The Pew Charitable Trust• UnionWatch• Urban Institute• Wyoming Liberty Group
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National Conference on Public Employee Retirement Systems
Fiduciary Memo• Memo drafted to support trustees’ decision to adopt
Code of Conduct. Sets forth fiduciary basis to enforce Code.
• All service providers to public funds should be able to sign off on the requirements of the Code of Conduct.
• Basic Fiduciary Principles A person is a fiduciary with respect to an employee
benefit plan to the extent they exercise discretionary authority with respect to the plan and its assets.
Fiduciary duties extend to all public plan service providers; they all exercise discretion.
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National Conference on Public Employee Retirement Systems
Fiduciary Memo
• Plan fiduciary must act solely in the interest of the plan and its participants and beneficiaries for the exclusive purpose of service plan related goals.
• If a fiduciary takes action they know will harm a plan but will advance corporate or personal interests, it is a breach of fiduciary duty to not act solely in the interests of the plan.
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National Conference on Public Employee Retirement Systems
Fiduciary Memo• Code of Conduct – Conflicts of Interest• Trustees must perform due diligence on provider to
identify and address perceived or real conflicts of interest.
• Service providers: receive money for services provided to public plan; use that money to make a contribution to a
company that advocates for the diminishment of public defined benefit plan;
conflict of interest – not in best interests of plan or its members.
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National Conference on Public Employee Retirement Systems
Fiduciary Memo
• Code does not require firing a service provider if a conflict of interest found, but rather serves as a vehicle to identify conflicts; it is up to trustees as to action to be taken to address the conflict.
• If Code of Conduct is incorporated in the RFP process, conflicts will be identified and weighed prior to determination of which vendor to hire.
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National Conference on Public Employee Retirement Systems
What can you do?
• If you believe the Code of Conduct is needed: Get your plan to incorporate the Code of Conduct
in its RFP process for future searches. Then invite current service providers to endorse
the Code of Conduct. Let NCPERS know. We’ll keep track of funds and
service providers that adopt the Code of Conduct.• We’ll make the process easy for you!!!
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Implementation Packet
• www.ncpers.org/codeofconduct
• Code of Conduct• Schedule A• Description of Schedule
A Process• Fiduciary memo• Model motions
National Conference on Public Employee Retirement SystemsNational Conference on Public Employee Retirement Systems
NCPERS 2015/16 Educational ProgramsPublic Safety Employee Pension & Benefits Conference
October 25-28, 2015 in Rancho Mirage, CAHealthcare Symposium & Legislative Conference
January 24-26, 2016 in Washington, DCTrustee Educational Seminar (TEDS)
May 14-15, 2016 in San Diego, CAAnnual Conference & Exhibition (ACE)
May 15-19, 2016 in San Diego, CAPublic Pension Funding Forum
August 21-23, 2016 at Yale University, CT
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National Conference on Public Employee Retirement Systems
Thank You
NCPERS444 North Capitol Street, NW, Suite 630Washington, DC 200011-877-202-5706www.retirementsecurityforall.org www.NCPERS.org
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