Preliminary
Citation and commencement1
1
These Regulations may be cited as the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998.
2
These Regulations shall come into force on 19th August 1998.
General definitions2
In these Regulations—
“the 1997 regulations” means the Local Government Pension Scheme Regulations 19972;
“administering authority” means a body required to maintain a pension fund under the 1997 regulations;
“European authorised institution” and “European institution” have the same meanings as in the Banking Co-ordination (Second Council Directive) Regulations 19923;
“FSAVC scheme” is a scheme approved by virtue of section 591(2)(h) of the Taxes Act;
“fund money” means money in the pension fund maintained by an administering authority;
“home-regulated investment business” has the same meaning as in the Banking Co-ordination (Second Council Directive) Regulations 1992;
“limited partner” means a person who is not liable for the debts or obligatons of a partnership beyond the amount he contributed at the time he became a partner;
“member” has the same meaning as in section 124(1) of the Pensions Act 19954;
“proper advice”, in relation to an administering authority, means the advice of a person who is reasonably believed by them to be qualified by his ability in and practical experience of financial matters (including any suitable officer of theirs);
“recognised stock exchange” has the same meaning as in section 84(1) of the Taxes Act;
“relevant institution” means—
- a
the Bank of England,
- b
an institution authorised under Part I of the Banking Act 19875 (regulation of deposit-taking business),
- c
a person to whom the restriction on acceptance of deposits in section 3 of that Act does not apply because he is specified in Schedule 2 to that Act (central banks etc.), or
- d
a European authorised institution which has lawfully established a branch in the United Kingdom for the purpose of accepting deposits;
- a
“securities” includes shares, stock and debentures;
“stock lending arrangement” means an arrangement such as is mentioned in section 263B of the Taxation of Chargeable Gains Act 19926;
“sub-underwriting contract” means a contract with a person who is underwriting a share issue to acquire the shares from him if he requires it;
“Taxes Act” means the Income and Corporation Taxes Act 19887;
“traded option” means an option quoted on a recognised stock exchange or on the London International Financial Futures Exchange;
“Transitional Regulations” means the Local Government Pension Scheme (Transitional Provisions) Regulations 19978;
“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.
Definition of “investment”3
1
In these Regulations “investment” and similar 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
If the administering authority use fund money for any purpose for which they may borrow money, that counts as an investment.
5
An insurance contract is an investment if and only if the contract is made with a person within paragraph (6) for whom making the contract is business within class III or class VII in Schedule 1 to the Insurance Companies Act 19829 (linked long term and pension fund management business).
6
The persons within this paragraph are—
a
a person whom that Act permits to carry on such business, and
b
an insurance company which, because it has its head office in a member State, is permitted under the law of such a State to carry on insurance business of a similar sort.
7
A stock lending arrangement is an investment if and only if, in respect of it, the conditions in regulations 5.58 and 5.60 of Section L of the Financial Services (Regulated Schemes) Regulations 1991 are complied with, modified as specified in paragraph (8).
8
Those modifications are—
a
for the references in regulation 5.58 to section 129 of the Income and Corporation Taxes Act 1988 substitute a reference to section 263B of the Taxation of Chargeable Gains Act 1992;
b
delete paragraphs 1a, 1c(ii) and 2b;
c
for the references in both those regulations to the trustee, substitute a reference to the administering authority; and
d
for the reference in paragraph 1c(iii) of regulation 5.58 to Guidance of the Board, substitute a reference to Guidance Release 4/91 issued by the Securities and Investments Board in June 1991.
9
It is an investment to contribute to a limited partnership in an unquoted securities investment partnership.
10
A sub-underwriting contract is an investment.
Definition of “investment manager”4
1
This regulation describes those persons who count as an “investment manager” for these Regulations.
2
A person is an investment manager if he is authorised under the Financial Services Act 198610 to manage the assets of occupational pension schemes.
3
A person is also an investment manager if he—
a
does not transact investment business (within the meaning of that Act) from a permanent place of business maintained by him in the United Kingdom;
b
has a head office situated outside the United Kingdom in a member State;
c
is recognised by the law of that State as a national of a member State;
d
is authorised under that law to engage in one or more of the actitivies specified in Part II of Schedule 1 to the Financial Services Act 1986 (which lists different sorts of investment business); and
e
is not prevented by that law from managing the assets of occupational pension schemes or assets belonging to another person.
4
A European institution carrying on home-regulated investment business in the United Kingdom is also an investment manager.