Contact: David Wilson, ext 7407

1. Introduction

1.1 In October 2003, the Government issued the Local Government Pension Scheme (Management and Investment of Funds) (Amendment) Regulations 2003 (attached). These new regulations came into force on 19 November 2003.

1.2 These regulations amend the main 1998 controlling regulations by giving LGPS administering authorities an option to adopt more relaxed restrictions on how their funds are invested. Instead of complying with the current limits as set out in column 1 of the Schedule to the new regulations, authorities can make a formal decision to increase some or all of those limits up to the percentages shown in column 2 of the Schedule.

1.3 Authorities can adopt some or all of the new limits on the following conditions:

· They have taken "proper advice".

· They specify which limits they are increasing, by how much, and reasons for the increases.

· They specify the period for which the decision applies and when it will be reviewed.

· They have amended and published a new Statement of Investment Principles accordingly.

2. Proposal

2.1 It is suggested that the Panel take no action at this stage to increase any of the current limits listed in column 1 of the Schedule. The Fund's managers are required by their mandates to apply the current limits, with the exception of the limit on investments in unlisted securities which the Panel has fixed at 0.1%. So far, the current limits have not acted as a restriction on the investment of the Fund, and it is highly unlikely to become an issue in the foreseeable future.

2.2 The Panel may wish to reconsider the issue in 2005 following the scheduled review of the scheme-specific benchmark.

Recommendation

1 That the Panel note this report, but take no decision to increase any of the investment limits pending the review of the benchmark in 2005.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

TITLE FILE

None.