LGFPS2 - ODPM
To All Addressees on attached sheet
THE LOCAL GOVERNMENT PENSION SCHEME (AMENDMENT) (No.2) REGULATIONS 2005
SI 2005 No. 3199
1. With Ministers agreement, I enclose a copy of regulations which amend the Local Government Pension Scheme Regulations 1997 ("the main regulations").
2. Briefly, the new regulations require each pension fund administering authority to prepare and publish and maintain a policy statement on governance, and a policy statement on its communications strategy
The amendments apply to LGPS administering authorities
Following a limited informal consultation early
in 2004 on the issues of representation and communications, a statutory consultation
paper was circulated on
Governance Policy Statements
5. Authorities are asked to note that the policy statement described in the statutory consultation paper as a representation policy statement is called a governance policy statement in the regulations. This change has been made for technical drafting reasons but also because it better reflects the fact that the policy is not just about representation but about the whole approach towards the governance of LGPS pension funds. The regulations also include some other limited changes. Attention is drawn to these at the relevant points below.
6. The governance policy statement requirement is made under the Local Government Pension Scheme Regulations 1997 rather than under the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998 (the investment regulations) as proposed in the statutory consultation paper. The change reflects concerns that the Statement of Investment Principles could become overloaded and unwieldy if further extended.
7. Regulation 3 of the SI inserts new regulation 73A into the main LGPS regulations. This requires each administering authority to publish, after consultation with those persons they consider appropriate, a statement setting out the authority's policy on pension fund governance, including issues concerning the representation and participation of key stakeholders on pension/investment committees.
8. Regulation 73A(1) makes it clear - by mentioning possible delegation of all/part of the function to a committee, subcommittee or officer of the authority - that an authoritys statement should provide information about all relevant governance structures and arrangements which would, of course, include delegation to a specified officer.
9. If an administering authority does not delegate any part of the pension fund function, it would still be in the spirit of the regulation for the policy statement to describe and explain the authoritys approach to governance.
10. More generally, if administering authorities wish to go beyond these parameters in any way, they are encouraged to do so.
11. Regulation 73A(1)(b)(iii) makes it clear that the term employing authorities includes non-Scheme employers. This is already the position legally, but the point is clarified. An authoritys policy statement should therefore include information on the representation of any admitted body.
12. For the avoidance of doubt, the word "members" is defined in Schedule 1 of the main regulations and, in turn, by section 124(1) of the Pensions Act 1995, to include active, deferred and pensioner members.
By virtue of regulation 73A(2) authorities will have until
14. Administering authorities not constituted as local authorities may deal with their pension fund governance function otherwise than by delegation to a formal committee. They should provide sufficient information about their decision-making and stakeholder representation/engagement arrangements to ensure equal transparency with local authority administering authorities.
15. The CIPFA Pensions Panel expects to publish initial guidance soon to assist authorities in implementing this regulation. The Panels existing guidance on the Myners Principles includes material on pension management/investment committees in its discussion of Principle 1 (effective decision-making). 
16. The composition of relevant committees and subcommittees is for individual administering authorities to consider. But, in exercising their discretion on this matter, it is important that they recognise the desirability of achieving an effective and comprehensive level of stakeholder representation within the LGPS.
authorities will be required to submit a copy of their policy statement after
18. The data in the statements will help ODPM to assess the overall position on democratisation, note examples of good practice, and identify examples of effective governance across the LGPS as a whole. There might, for instance, be a role for further good practice guidance and/or regulatory provision.
19. As part of the outcome of discussions about the longer term future of the LGPS overseen by the framework of the Deputy Prime Ministers Tripartite Committee, further work on governance issues in the Scheme is thought desirable. Discussions are to begin on how best to take this initiative forward in terms of greater degrees of trusteeship, alternative best practice structures to aid participation in its widest sense within the statutory framework of the Scheme, and the need for training and development of those non-elected participants. ODPM wishes to see a fully participative forum to take these matters forward.
Communication Policy Statements
20. New regulation 106B of the main LGPS regulations is added by regulation 4 of the SI. This requires each LGPS administering authority to prepare, publish and review a policy statement setting out its communications strategy for communicating with members, members' representatives, prospective members and employing authorities; and for the promotion of the Scheme to prospective members and their employing authorities.
regulation 106B(3), the first such policy
statement must be published on or before
22. For the avoidance of doubt, the word "members" where it appears in new regulation 106B(1)(a), is defined in Schedule 1 of the principal regulations and, in turn, by section 124(1) of the Pensions Act 1995, to include active, deferred and pensioner members.
23. Regulation 106B(5) explains that employing authorities where it appears in regulation 106B includes non-Scheme employers. This is already the position legally, but the point is spelt out for the avoidance of doubt. An authoritys policy statement should include information on communications with admitted body employers employing scheme members or prospective members.
24. Along with any other planned methods of publication, administering authorities are encouraged to consider including both statements on their websites where suitable. There is nothing in the regulations to prevent an authority from choosing to publish their governance and communications statements together.
will expect administering authorities to submit a copy of their policy statement
26. HM Stationery Office now publish an Explanatory Memorandum alongside new Regulations. The Memorandum briefly describes a statutory instrument and its purpose, and is prepared for the information of Parliamentary Committees which examine proposed regulations.  The Explanatory Memorandum for these Regulations can be found in the statutory instruments section of the Stationery Office website at www.legislation.hmso.gov.uk
The Chief Executive of:-
Borough Councils (
and County Borough Councils in
Tameside Metropolitan Borough Council
Wirral Metropolitan Borough Council
Town Clerk, City of London Corporation
Police Authorities in
Fire and Rescue Authorities
The Secretaries of:-
Local Government Association
New Towns Pension Fund
Trades Union Congress
National Association of Pension Funds (NAPF)
Society of Welsh LA PF Treasurers
 Guidance for Chief Finance Officers - Principles for Effective Decision Making in the Local Government Pension Scheme, 2002.
 The Joint Committee on Statutory Instruments and the House of Lords Merits Committee.