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Conflicts of interest

You must identify, monitor and manage any conflicts of interest of those involved in running your pension scheme.

Make sure your process includes a conflicts policy, register of interest, a system for declarations and advance planning.

Setting up a conflicts process

You must have a process that enables you to identify, monitor and manage any conflicts of interest, including potential conflicts, for those involved in running your scheme. This includes trustees, advisers and service providers. Your process should include the following controls:

  • agreeing a conflicts policy setting out your approach to dealing with conflicts – this should cover the process to identify and monitor conflicts and outline options for managing these – see an example conflicts of interest policy (PDF, 110kb, 4 pages)
  • register of interests for recording all actual or potential conflicts – see a conflicts of interest register template (PDF, 143kb, 6 pages)
  • declarations when trustees, advisers and service providers are appointed, ongoing declarations by advisers and service providers as soon as they arise, and declarations at the start of trustee and sub-committee meetings
  • advance planning to identify conflicts that may occur in the future and available options for managing these

Trustee conflicts of interest

You need to understand when actual or potential conflicts of interest may arise for trustees of pension schemes. They may arise, for example, when the trustee board needs to review commercially sensitive information relating to the employer and the board includes a trustee who used to work for the employer or for an adviser to the employer.

Where there are acute or pervasive conflicts or tensions associated with a trustee’s role, eg where they are also the finance director of the employer and/or its parent company, it’s likely to be inappropriate for them to continue to be involved in those funding negotiations for a defined benefit scheme.

Not all conflicts are employer related. They can also arise for trustees who, for example, are scheme members or who hold trade union representative roles.

You should be alert to these types of issues and must have processes in place to manage them.

Adviser and service provider conflicts of interest

It is important that your conflicts policy also addresses potential conflicts of interest for advisers. These can arise because your advisers and service providers may recommend services or products offered by related parties, for which they may gain financial or non-financial benefit.

Where you believe that any advice or service may be compromised, you should consider further measures to manage the conflict. This may include speaking to other advisers or providers, tendering for alternate advisers or providers and comparing products. You should document any actions you take.

You should also ensure your advisers and providers have adequate arrangements in place for disclosing and managing conflicts of interest.

If your adviser or service provider is also used by the scheme’s employer, you should consider how to address potential conflicts.

Trustee Toolkit online learning

‘The trustee’s role’ module contains a tutorial on ‘Conflicts of interest’. You must log in or sign up to use the Trustee Toolkit.

Go to the Trustee Toolkit