The Local Government Pension Scheme (Management and Investment of Funds) (Scotland) Amendment Regulations 2003

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Local Government Pension Scheme (Management and Investment of Funds) (Scotland) Regulations 1998 (“the principal Regulations”).

Regulation 3 inserts in the principal Regulations a new provision requiring each administering authority to publish a written statement of investment principles. The provision requires that such a statement must set out the extent to which the administering authority comply with the ten principles of investment practice contained in the document published in April 2002 by CIPFA, the Chartered Institute of Public Finance and Accountancy, and called “CIPFA Pensions Panel Principles for Investment Decision Making in the Local Government Scheme in the United Kingdom (Guidance note issue No. 5)”. Each administering authority must publish, by no later than 30th June 2003, their policy on the extent to which they comply with the ten principles and give their reasons where they do not comply.

The Guidance Note can be purchased from CIPFA, 3 Robert Street, London WC2N 6RL, tel [phone]. The publication costs £50 to members of the public, £25 to local authorities and £12.50 to an administering authority.

The ten investment principles were issued by the Government in October 2001 in response to proposals in the Myners Review of Institutional Investment in the United Kingdom, issued in March 2001. Further information about these can be obtained from HM Treasury Public Enquiry Unit, tel [phone] or from HM Treasury’s web site www.hm-treasury.gov.uk

Regulation 4 amends the limit on investments in insurance contracts from 25% for all such contracts to 25% for any one such contract, the limit being calculated by reference to the total value of the fund at the date that the investment is made. It also inserts a new definition of “open-ended investment company” in the principal Regulations to correct amendments made in error by the Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001 (S.I. 2001/3649).

Regulation 5 provides that where an administering authority have already published a statement under regulation 9A, they are not required to prepare and publish a new statement but they must amend their existing published statement by 30th June 2003.