Contact: David Wilson, ext 7407

1. Introduction

1.1 The Pension Fund's business plan provides for a review of its Statement of Investment Principles (SIP) by the Panel at this meeting, and annually thereafter.

1.2 A revised draft of the SIP is attached at Appendix 1. Significant changes are shown in italics.

2. Summary of changes

2.1 The main changes are:

· Alterations to reflect the fact that Aberdeen Asset Managers acquired Deutsche Asset Management with effect from 1 October 2005, and now manage Deutsche's portfolios.

· Clauses inserted as appropriate to inform readers that the current review of the Fund's investment management arrangements is under way.

· Reference to the fact that the 2005 asset/liability study is complete, and a listing of the investment returns assumptions made in the 2005 study which replaces the listing of returns used in the previous study in 1999.

· Reference to the current tender process to recruit a global custodian.

· It refers to the use of other consultants, as necessary, and to the appointment of Bramdean Asset Management in September 2005 to assist with the investment management review process.

2.2 This SIP forms an Appendix to the Fund's Funding Strategy Statement, which was approved at the Panel's meeting on 3 November 2004.

2.3 It may need to be revised when the outcome of the ongoing review of fund management arrangements has been completed.

Recommendation

1 That the Panel approve the draft updated Statement of Investment Principles.

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.