The Local Government Pension Scheme (Management and Investment of Funds) (Scotland) Regulations 1998

Investment managers

Choice of investment managers

6.—(1) Instead of managing and investing fund money for themselves, an administering authority may appoint one or more investment managers to manage and invest it for them.

(2) However, they may appoint an investment manager only if they comply with paragraphs (3) to (6).

(3) They must reasonably believe that the investment manager is suitably qualified by his ability in and practical experience of financial matters to make investment decisions for them.

(4) The investment manager must not be their employee.

(5) They must be satisfied–

(a)that the fund is managed by an adequate number of investment managers; and

(b)that the value of the fund money to be managed by any one investment manager will not be excessive.

(6) They must have taken proper advice.

Terms of appointment of investment managers

7.—(1) Investment managers must, if appointed, be appointed on the terms set out in paragraphs (2) to (7).

(2) The administering authority must be able to terminate the appointment by not more than one month’s notice.

(3) The investment manager must report to the administering authority at least once every three months on the action he has taken for them.

(4) The investment manager must comply with all the administering authority’s instructions except in circumstances permitted by his terms of appointment.

(5) In managing the fund the investment manager must bear in mind–

(a)that fund money must be invested in a wide variety of investments;

(b)the suitability of those types of investment for the fund; and

(c)the suitability of any particular investment of that type.

(6) However, paragraph (5)(a) does not apply where the investment manager only manages part of the fund and the terms of his appointment provide that it does not apply.

(7) The investment manager must not make investments which would contravene regulation 11 or Schedule 1.

(8) In determining the investment manager’s terms of appointment the administering authority must take proper advice.

Review of investment managers' performance

8.—(1) Where an administering authority have appointed an investment manager they must keep his performance under review.

(2) At least once every three months they must review the investments he has made.

(3) Periodically they must consider whether or not to retain him.

(4) In reviewing an investment manager’s decisions and appointment an administering authority must take proper advice–

(a)if regulation 7(5)(a) applies, about the width of variety of the investments he has made; and

(b)about the suitability of those investments for the fund generally and as investments of their type.