New regulations governing the management and investment of LGPS funds will mean that local authority pension fund employers will no longer be able to pool their LGPS cash reserves with non-pension cash for short-term money market investment.

The Regulations come into force on 1 January 2010 but some provisions come into force later. Though mainly a consolidation of the equivalent 1998 regulations and subsequent amending regulations, they include some notable changes of substance. Local authorities will:

  • from 1 April 2010 no longer be able to use pension fund money for any purpose for which they have a statutory right to borrow (i.e. no more pooling);
  • have a limited power to borrow on behalf of the pension fund for up to 90 days in certain exceptional circumstances (including to enable benefits to be paid on time);
  • be required to keep pension fund money in a separate bank account by 1 April 2011.

Other provisions include:

  • what counts as an investment;
  • required and permitted payments into and out of the pension fund;
  • appointment of an investment manager and review of its performance;
  • requirement to prepare and maintain an investment policy;
  • limits on certain types of investments