Contact: Anthony Dodridge, (01962) 847407; email: [email protected]

1 Summary

1.1 The County Treasurer wrote to Pension Fund Panel members on 25 February 2008 to request their approval to increase the Fund's investment limits in private equity and indirect property partnerships. This report confirms the decision taken following members' responses to the letter and sets out the position on all the statutory investment limits.

1 Recommendations

a) That the increase to the limit on contributions to private equity and indirect property partnerships from 5% to 10% be confirmed.

b) That the remainder of the report be noted.

2 Increase to the limit on contributions to partnerships

2.1 As the Fund's investment in private equity and indirect property partnerships was £136m at 31 January 2008 or 4.5% of the Fund's total value, Panel members were asked on 25 February 2008 to approve an increase in the limit on contributions to partnerships from 5% to 10% so that the programme of alternative investments could continue to be implemented. This increase was in accordance with the powers given to the County Council by the Local Government Pension Scheme (Management and Investment of Funds) (Amendment) Regulations 2003.

2.2 All Panel members who responded to the County Treasurer's letter were in favour of the increase and so the change was made with effect from 1 March 2008. The new limit was incorporated in a revised Statement of Investment Principles which was circulated in draft form to the Panel with the County Treasurer's letter of 25 February 2008.

2.3 The 10% limit on contributions to partnerships will apply until such time as the Fund's overall asset allocation is next reviewed.

2.4 The full list of statutory investment limits are summarised in Appendix 1. The Panel has not increased any of the other limits.

3 CIPFA survey of LGPS investment regulations

3.1 The Chartered Institute of Public Finance and Accountancy (CIPFA) is currently in the process of carrying out a survey of local authority pension scheme practitioners' views on the Local Government Pension Scheme (LGPS) regulations governing the limits on investments. The survey seeks to investigate whether the regulations are `fit for purpose' and seeks to elicit areas of inefficiency and difficulties that practitioners meet through operating within the regulations.

3.2 Whilst the Hampshire Pension Fund has not found the limits on investment types imposed by the existing regulations to be unduly restrictive, the results of this survey will be reported to Panel in due course.

Section 100D - Local Government Act 1972 - background documents

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

NB: The list excludes:

None.

I:\...Anthony\Pension Fund Panels\May 2008\penpanel 020508 investment limits.doc

Appendix 1

Investment limits - as percentage of the total Fund at the time of investment

The first column shows the percentage limits permitted by the regulations. The Hampshire Pension Fund adheres to the limits outlined in this first column, with the one exception of the `All contributions to partnerships' having been increased to 10%. The second column shows the maximum amount to which these limits may increased under the 2003 regulations.