The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009
| Jurisdiction | UK Non-devolved |
| Citation | SI 2009/3093 |
| Year | 2009 |
2009 No. 3093
Pensions, England And Wales
The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009
Made 24th November 2009
Laid before Parliament 1st December 2009
Coming into force 1st January 2010
These Regulations are made in exercise of the powers conferred by section 7 of, and Schedule 3 to, the Superannuation Act 19721.
In accordance with section 7(5) of that Act the Secretary of State has consulted (a) such associations of local authorities as appeared to the Secretary of State to be concerned; (b) the local authorities with whom consultation appeared to the Secretary of State to be desirable; and (c) such representatives of other persons likely to be affected by the Regulations as appeared to the Secretary of State to be appropriate.
The Secretary of State makes the following Regulations:
Preliminary
Citation, commencement and application
1.—(1) — These Regulations may be cited as the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009 and shall come into force on 1st January 2010.
(2) These Regulations apply in relation to England and Wales2.
General definitions
2.—(1) In these Regulations—
“the 2000 Act” means the Financial Services and Markets Act 20003;
“administering authority” means a body required to maintain a pension fund under the Administration Regulations;
“the Administration Regulations” means the Local Government Pension Scheme (Administration) Regulations 20084;
“fund money” means money in the pension fund maintained by an administering authority;
“proper advice”, in relation to an administering authority, means the advice of a person whom the authority reasonably believes to be qualified by their ability in and practical experience of financial matters (including any such person who is an officer of the administering authority);
“recognised stock exchange” has the same meaning as in section 1005(1) of the Income Tax Act 20075;
“securities” includes shares, stock and debentures;
“statement of investment principles” means the statement referred to in regulation 12(1) or any revision of it, as appropriate;
“stock lending arrangement” means an arrangement such as is mentioned in section 263B of the Taxation of Chargeable Gains Act 19926; and
“sub-underwriting contract” means a contract with a person who is underwriting a share issue to acquire the shares from that person if that person requires it.
(2) Paragraphs (5) to (7) of regulation 3, paragraphs (2)(a) and (2)(b) of regulation 6, regulation 7 and item 4 of the table and the definition of “relevant institution” in Schedule 1, must be read with—
(a)
(a) section 22 of the 2000 Act (classes of activity and categories of investment);
(b)
(b) any relevant order under that section; and
(c)
(c) Schedule 2 to that Act7(regulated activities).
Definition of “investment”
3.—(1) In these Regulations “investment” and related expressions have their normal meaning.
(2) But the following provisions of this regulation specify things which count as investments for these Regulations, although they might not otherwise do so, and exclude things which might otherwise count.
(3) A contract entered into in the course of dealing in financial futures or traded options is an investment.
(4) Prior to 1st April 2010, if the administering authority uses fund money for any purpose for which it may borrow money, that use is an investment.
(5) A contract of insurance is an investment if it is a contract of a relevant class, and is entered into with a person within paragraph (6) for whom entering into the contract constitutes the carrying on of a regulated activity within the meaning of the 2000 Act.
(6) The persons within this paragraph are—
(a)
(a) a person who has permission under Part 4 of the 2000 Act (permission to carry on regulated activities) to effect or carry out contracts of insurance of a relevant class;
(b)
(b) an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the 2000 Act8(EEA passport rights), which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule9) to effect or carry out contracts of insurance of a relevant class; and
(c)
(c) a person who does not fall within sub-paragraph (a) or (b) and who, because that person’s head office is in an EEA State within the meaning of the 2000 Act other than the United Kingdom, is permitted by the law of that State to effect or carry out contracts of insurance of a relevant class.
(7) A contract of insurance is of a relevant class for the purposes of paragraphs (5) and (6) if it is—
(a)
(a) a contract of insurance on human life or a contract to pay an annuity on human life where the benefits are wholly or partly to be determined by reference to the value of, or the income from, property of any description (whether or not specified in the contract) or by reference to fluctuations in, or in an index of, the value of property of any description (whether or not so specified); or
(b)
(b) a contract to manage the investments of pension funds, whether or not combined with contracts of insurance covering either conservation of capital or payment of a minimum interest.
(8) A stock lending arrangement is an investment if, and only if, in respect of it, the conditions in rules 5.4.4R and 5.4.6R, modified as specified in paragraph (9) of this regulation10, in the Collective Investment Schemes Sourcebook made by the Financial Services Authority11are fulfilled in relation to that arrangement.
(9) The modifications mentioned in paragraph (8) are that—
(a)
(a) in rules 5.4.4R and 5.4.6R references to the depositary must be read as if they were references to the administering authority;
(b)
(b) in paragraph 1 of rule 5.4.4R for the words “An ICVC, or the depositary at the request of the ICVC, or the trustee at the request of the manager, may enter into a repo contract, or” there shall be substituted the words “The administering authority may enter into”;
(c)
(c) in paragraph 1(a) of rule 5.4.4R, the words “for the account of the ICVC or by the trustee,” and the words “or to the trustee” shall be omitted;
(d)
(d) sub-paragraphs 1(b) (iii) and 1(b) (iv) of rule 5.4.4R shall not apply;
(e)
(e) paragraph 1A of rule 5.4.6R shall not apply;
(f)
(f) in paragraph 5 of rule 5.4.6R the words “under COLL 6.3 (Valuation and pricing) or this chapter,” shall be omitted, and the reference to the authorised fund must be read as if it were a reference to the pension fund; and
(g)
(g) in paragraph 6 of rule 5.4.6R references to scheme property must be read as if they were references to fund money, and the words in sub-paragraph (a) “for the purposes of COLL 6.3 or this chapter” and in sub-paragraph (b) “of this chapter” shall be omitted.
(10) It is an investment to contribute to a limited partnership in an unquoted securities investment partnership.
(11) A sub-underwriting contract is an investment.
(12) For the purposes of this regulation—
“limited partnership ” means a partnership where the partners are not liable for the debts or obligations of the partnership beyond the amount which they contributed at the time of becoming a partner;
“traded option” means an option quoted on a recognised stock exchange or on the London International Financial Futures Exchange; and
“unquoted securities investment partnership” means a partnership for investing in securities which are normally not quoted on a recognised stock exchange when the partnership buys them.
Management of pension fund
Management of pension fund
4.—(1) This regulation is about the sums which an administering authority must pay or credit to and may pay from the pension fund which it administers.
(2) An authority must pay or credit to its pension fund, in addition to any other sum the Benefits Regulations, the Transitional Regulations or the Administration Regulations specify must be paid or credited to the fund—
(a)
(a) the amounts payable by it or paid to it for the credit of the fund by any other authority under regulations 39 to 41 of the Administration Regulations (employers’ contributions and payments);
(b)
(b) all members’ contributions including those made by virtue of the Transitional Regulations, except contributions payable under regulation 25 of the Administration Regulations (additional voluntary contributions and shared cost additional voluntary contributions);
(c)
(c) all income arising during the year from investment of the fund;
(d)
(d) all capital money deriving from such investment; and
(e)
(e) all additional payments received by the authority under the Benefits Regulations, the Transitional Regulations or the Administration Regulations.
(3) In the case of an administering authority which maintains more than one pension fund, as respects sums which relate to specific members the references in paragraph (2) to an authority’s fund are to the fund which is the appropriate fund for the members in question in accordance with Schedule 4 to the Administration Regulations (appropriate funds).
(4) Interest under regulation 44(1) of the Administration Regulations (interest) must be credited and paid to the fund to which the overdue payment is due.
(5) Any costs, charges and expenses incurred administering a pension fund may be paid from it except those costs and charges prescribed by regulations made under section 23 (supply of pension information in connection with divorce etc), 24 (charges by pension arrangements in relation to earmarking orders) or 41 (charges in respect of pension sharing costs) of the Welfare Reform and Pensions Act 199912which the administering authority is enabled to recover by or under any such regulations.
(6) In this regulation—
“member” means any active or deferred member or any pensioner but does not include a...
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