A press release from the Executive Committee of the National Association of State Retirement Administrators (NASRA) says that the group unanimously voted at its fall meeting to “reaffirm the Association’s long-held resolutions promoting ethics policies and disclosure requirements for those entrusted with the investment and management of public pension funds.”
“In light of the publicity surrounding recent disclosures and allegations of unethical or illegal activity, the Executive Committee wishes to restate and reaffirm the Association’s long-standing belief that public plan fiduciaries should be held to the highest ethical standards,” said Eric Stanchfield, NASRA President and Executive Director of the District of Columbia Retirement Board. “We encourage all public retirement systems to exercise due diligence and vigorously enforce disclosure requirements and ethics policies that demand unassailable fiduciary conduct by system staff, trustees and service providers, including undivided loyalty to the fund, open and honest decision-making processes, and interests that are aligned solely with the plan,” he said.
NASRA has two long-standing resolutions (one dated August 11, 1999 , the other August 10, 2005 ) that call for public retirement systems’ fiduciaries, including those who are under contract to provide services to the system, to be held to “strong conflict of interest, financial disclosure and other ethics-related laws and standards, and to avoid even the appearance of influence that may be created by relationships with others.:
“Plans should be vigilant in continually monitoring adherence to these standards, ensuring complete transparency in decision-making and eliminating conflicts of interest, both real and perceived,” he added in the press release.
NASRA members are the directors of the nation’s State, territorial, and largest statewide public retirement systems. Together, these systems hold more than $2 trillion in assets and provide pension and other benefits to more than two-thirds of all state and local government employees.
Excerpts of the pertinent parts of the disclosures follow:
align="left"> RESOLUTION 2005-01 - Ethics Standards and Disclosures Required of ServiceProviders
NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators encourages state retirement systems to exercise their due diligence and adopt or revise disclosure requirements and ethics policies to demand professional and advisory service providers meet fiduciary standards for retirement systems that include:
- Loyalty: such service providers should be held to the highest degree of ethical standards, making all decisions on behalf of the system in the best interest of system.
- Open and Honest Decision Making: such service providers should be required to make decisions in a fair, honest and open manner, sharing information with interested parties to enhance the quality of the system's decision making process.
- Compatible Relationships with Others: such service providers should be required to carefully review the trust and conflict of interest laws applicable to the system to ensure that relationships with other parties are not incompatible with their duties to the system.
- Full Disclosure of Interests: such service providers should be required to divulge pertinent business activities, relationships and alliances including, among other things i) all services the firm, its principals, or any affiliate provide that generate revenue, ii) if the firm is owned in whole or in part by other firms or organizations, or if the firm owns other firms or organizations, that sell services to public pension systems, and iii) if the firm, its principals, or any affiliate has any strategic alliances with firms that sell services to public pension systems.
Adopted August 10, 2005
align="left"> RESOLUTION 1999-06 - Code of Ethics
NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators encourages its plan members to adopt a Code of Ethics, including the following standards:
1. Exclusive Loyalty: Public fund fiduciaries should abide by the highest ethical Standards, making all decisions in the best interest of system participants, placing those interests above all other interests.
2. Decision Making: Public fund fiduciaries should make decisions in a fair, honest and open manner, sharing information with fellow fiduciaries and all interested parties to enhance the quality of the system's decision making process.
3. Personal Conduct: Every public system's fiduciaries, including those who are under contract to provide services to the system, should take all reasonable steps necessary to ensure a full and accurate understanding of the trust, conflict of interest, financial disclosure and other ethics related laws applicable to the system. When giving or accepting gifts, fiduciaries should be aware of both the legality and appearance of influence that such gifts may create. When seeking or approving administrative expenses for the system, fiduciaries should balance the benefit of the expenditure against any perception of personal benefit to the fiduciary.
4. Relationships with Others: Every public system's fiduciaries should carefully review the trust and conflict of interest laws applicable to the system to ensure that the fiduciary's relationships with other parties are not incompatible with the duties to the system
Adopted August 11, 1999