DRAFT 16 June 2003
pensions, england and wales
The Local Government Pension Scheme (Management and Investment of Funds) (Amendment) Regulations 2003
Made - - - - 2003
Laid before Parliament 2003
Coming into force - - 2003
The Secretary of State, in exercise of the powers conferred on him by section 7 of the Superannuation Act 1972() and of all other powers enabling him in that behalf, after consultation with such associations of local authorities as appeared to him to be concerned, the local authorities with whom consultation appeared to him to be desirable and such representatives of other persons likely to be affected by the Regulations as appeared to him to be appropriate, hereby makes the following Regulations:
1.— These Regulations may be cited as the Local Government Pension Scheme (Management and Investment of Funds) (Amendment) Regulations 2003.
(1) These Regulations shall come into force on ___________.
(2) The Regulations extend only to England and Wales().
2. The Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998() shall be amended in accordance with regulation 3 of these Regulations.
3.— In regulation 11, for paragraph (2) substitute—
“(2) Subject to paragraph (2A), the percentages set out in Column 1 of Part I are the limits on the amount of each description of investment listed next to those percentages.
(2A) An administering authority may decide to increase those limits up to the limits set out in Column 2 of Part I in accordance with the requirements of regulation 11A.”.
(1) After regulation 11 insert—
“Requirements for increased limits
11A.—(1) An administering authority which—
(a) decides to increase limits under regulation 11(2A), or
(b) reviews previously increased limits,
must comply with the requirements of this regulation.
(2) They must have taken proper advice.
(3) They must take account of the factors set out in regulation 9(3).
(4) The decision must specify—
(a) the description of investment to which it applies;
(b) the limit on the amount of the investment;
(c) the reason for that decision;
(d) the period for which the decision will apply;
(e) if before the end of (d), the date when the decision will be reviewed; and
(f) that the decision complies with these Regulations.
(5) Where the period for which the decision will apply comes to an end, the limits will be those set out in Column 1 of Part I unless before the end of that period the administering authority reviews the decision in accordance with this regulation.
(6) A decision following a review to continue to use limits increased under regulation 11(2A) (whether or not the increased limits have been altered) must specify the matters set out in paragraph (4).
(7) Before a decision under regulation 11(2A) or paragraph (6) can take effect, the administering authority must revise and publish the written statement of investment principles which it is required to maintain under regulation 9A to include the matters specified in paragraph (4).”.
(2) For Part I of Schedule 1, substitute the Schedule to these Regulations.
Signed by the authority of the Secretary of State
________________________________
Parliamentary Under Secretary of State,
Office of the Deputy Prime Minister
________________
Regulation 3(3).
SCHEDULEPART I
Column (1) Limits under regulation 11(2) |
Column (2) Increased limits under regulation 11(2A) |
|
1. Any single sub-underwriting contract. |
1% |
5% |
2. All contributions to any single partnership. |
2% |
5% |
3. All contributions to partnerships. |
5% |
15% |
4. All deposits with—
|
10% |
15% |
5. All investments in unlisted securities of companies. |
10% |
15% |
6. Any single holding (but see paragraphs 13 and 14). |
10% |
15% |
7. All deposits with any single bank, institution or person (other than the National Savings Bank). |
10% |
15% |
8. All sub-underwriting contracts. |
15% |
- |
9. All investments in units or other shares of the investments subject to the trusts of unit trust schemes managed by any one body (but see paragraph 14). |
25% |
35% |
9A. All investments in open-ended investment companies where the collective investment schemes constituted by the companies are managed by any one body. |
25% |
35% |
9B. All investments in units or other shares of the investments subject to the trusts of unit trust schemes and all investments in open-ended investment companies where the unit trust schemes and the collective investment schemes constituted by those companies are managed by any one body (but see paragraph 14). |
25% |
35% |
10. Any single insurance contract. |
25% |
35% |
11. All securities transferred (or agreed to be transferred) by the authority under stock lending arrangements. |
25% |
- |
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend regulation 11 of, and Part I of Schedule 1 to, the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998 (the ‘principal Regulations’), which set down the limits for the different types of pension fund investments. The amendments allow an administering authority to decide to increase those limits up to the specified amounts. When deciding to increase limits, or reviewing previously increased limits, the administering authority must take account of proper advice and of the factors in regulation 9(3) of the principal Regulations (the advisability of investing fund money in a wide variety of investments and the suitability of particular investments and types of investments). A decision to increase limits, or to continue to use previously increased limits, must specify certain matters and those matters must be published in a revised statement of investment principles before the increased limits can take effect.