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Local Government: Pensions

Volume 491: debated on Wednesday 22 April 2009

To ask the Secretary of State for Communities and Local Government (1) what guidance has been provided to local authorities on (a) the setting of investment strategies in respect of the local government pension scheme and (b) appropriate levels of exposure to equities; (268829)

(2) what requirements there are on trustees of local government pension schemes in relation to maximising returns on their investments.

Investment decisions in the local government pension scheme in England and Wales are the responsibility of designated administering authorities whose decisions are subject to the provisions governing the management and investment of funds. Authorities are required to publish a Statement of Investment Principles, including their policy on the expected rate of return on investments, the types of investments to be held and the way in which risks are measured and managed. Decisions must be taken on the basis of expert advice, and comply with the regulations and with each authority’s published Statement of Investment Principles and Funding Strategy Statement. Authorities must have regard also to guidance issued by CIPFA on the preparation of these statements and on funding and investment issues.

Those responsible for investment decisions in the scheme are also required to act within general legal principles relating to their fiduciary duty and the investment of monies held in trust.