LGPS investment regs 2016
The Association welcomed the Government’s recent proposals to remove the arbitrary limits on the amount Local Authority funds can invest in certain types of legal structures. We have argued for some time that such limits are prescriptive and out of date. But Government may have gone too far. In particular we would argue that the regulations need to make some reference to the ultimate purpose of the investments: the fiduciary duty to pay members benefits.
The Association also has some concerns about the broad powers being taken by Government to direct funds' investments. There is a risk that such broad powers, combined with the lack of an explicit fiduciary duty, could ultimately be used by a future government to direct what funds invest in, with limited regard on the impact to the payment of members benefits and the costs to employers and members.
The Associations full response is set out below.