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Regulation P3 Use and investment of fund’s moneys

Original text. Later amendments are not shown.

(1)

Subject to paragraphs (3) to (9), the Committee—

(a)

shall invest any moneys forming part of the fund maintained by it (“fund moneys”) that are not for the time being required to meet payments to be made out of the fund under these regulations; and

(b)

may vary the manner in which any fund moneys are for the time being invested.

(2)

For the purposes of this regulation and of regulation P2(2)(c) investment includes any contract which by virtue of section 659 of the Act of 1988 (extension of pension schemes' tax exemptions to dealings in financial futures and traded options) is to be regarded as an investment for the purposes of the enactments referred to in that section.

(3)

The Committee shall not—

(a)

make any investment in securities of companies other than listed securities so as to cause the total value of such investments (except investments made in accordance with a scheme under section 11 of the Trustee Investments Act 1961f1) to exceed 10% of the value at the time of all investments of fund moneys; or

(b)

make any investment, other than—

(i)

an investment made in accordance with a scheme under section 11 of the Trustee Investments Act 1961; or

(ii)

an investment falling within paragraph 1 of Part I or paragraph 1 or 2 of Part II of the first Schedule to that Act; or

(iii)

a deposit with the Bank of England, an institution authorised under Part I of the Banking Act 1987f2 or a person for the time being specified in Schedule 2 to that Act,

so as to result in more than 5% of the value at the time of all investments of fund moneys being represented by a single holding, or more than 20% of that value being represented by investments in units or other shares of the investments subject to the trusts of unit trust schemes managed by any one body; or

(c)

make any deposit falling within sub-paragraph (b)(iii) so as to bring the aggregate of fund moneys deposited with any one bank, institution or person other than the National Savings Bank to an amount which exceeds 10% of the value at the time of all investments of fund moneys; or

(d)

lend to any person other than Her Majesty’s Government in the United Kingdom or the Government of the Isle of Man, or use as mentioned in paragraph (2), or deposit with a person specified in paragraph 12 or 13 of Schedule 2 to the Banking Act 1987, any further fund moneys so as to bring the aggregate of all fund moneys so lent, used or deposited to an amount which exceeds 10% of the value at the time of all investments of fund moneys.

(4)

For the purposes of paragraph (3)(d) moneys are not lent if they are—

(a)

invested in registered securities to which section 1 of the Stock Transfer Act 1963f3 or section 1 of the Stock Transfer Act (Northern Ireland) 1963f4 applies or in listed securities; or

(b)

deposited with the Bank of England an institution authorised under Part I of the Banking Act 1987 or a person for the time being specified in paragraphs 1 to 11 of Schedule 2 to that Act.

(5)

The Committee, subject to paragraph (6), may appoint one or more investment managers to manage and invest fund moneys on their behalf.

(6)

The Committee shall not make an appointment under paragraph (5) unless—

(a)

they have considered the value of the fund moneys to be managed by the investment manager or, as the case may be, by each of the investment managers to be appointed and are satisfied that it will not be excessive, having regard to proper advice, to the desirability of securing diversification of the management of the fund, and to the value of the assets of the fund; and

(b)

the terms of the appointment—

(i)

provide for the appointment to be terminable by not more than one month’s notice given by the Committee;

(ii)

require the investment manager to provide the Committee at least once every 3 months with a report setting out the action he has taken under the appointment;

(iii)

require the investment manager to comply with such instructions as the Committee, or a sub-committee or officer employed by the Committee when exercising authority under paragraph 2 of Part II of Schedule 20 may give;

(iv)

require the investment manager to have regard to the need for diversification of investments of fund moneys, and to the suitability of investments of any description of investment which he proposes to make and of any investment proposed as an investment of that description; and

(v)

prohibit the investment manager from making investments whichwould contravene paragraph (3).

(7)

Where the Committee have made an appointment under paragraph (5) they shall, at least once every 3 months, review the investments made by the investment manager and from time to time consider the desirability of continuing or terminating the appointment.

(8)

In the discharge of their functions under this regulation the Committee shall have regard—

(a)

to the need for diversification of investments of fund moneys; and

(b)

to the suitability of investments of any description of investment which they propose to make and of any investment proposed as an investment of that description; and

(c)

to proper advice, obtained at reasonable intervals.

(9)

Where the Committee appoints an investment manager under paragraph (5) they shall have regard—

(a)

in determining the terms of the appointment, to proper advice; and

(b)

in exercising their functions under paragraph (7)—

(i)

to the need for diversification of investments of fund moneys;

(ii)

to the suitability of investments of any description of investment which the investment manager has made and of any investment made as an investment of that description; and

(iii)

to proper advice.

(10)

The Committee may pay out of fund moneys any costs, charges and expenses incurred by them in the discharge of their functions under this regulation.

(11)

For the purposes of this regulation—

  • “companies” includes companies established under the law of any territory outside the United Kingdom;

  • “listed securities” means securities in respect of which a listing has been granted and not withdrawn—

    1. (a)

      on an investment exchange in the United Kingdom which is a recognised investment exchange within the meaning of the Financial Services Act 1986f5;

    2. (b)

      on an investment exchange outside the United Kingdom of international repute;

  • “proper advice” means the advice of a person who is reasonably believed by the Committee to be qualified by his ability in and practical experience of financial matters;

  • “securities” includes shares, stock and debentures;

  • “single holding” means investments—

    1. (a)

      in securities of, or in loans to or deposits with, any one body, other than investments in unit trust schemes; or

    2. (b)

      in units or other shares of the investments subject to the trusts of any one unit trust scheme; or

    3. (c)

      in the acquisition, development or management of, or in any advance of money upon the security of, any one piece of land; or

    4. (d)

      in the acquisition of any one chattel.

Annotations

Footnotes

f1

1961 c. 62 as amended by The Transfer of Functions and Adaption of Enactments Order 1973 (S.R. & O. (N.I.) 1973 No. 256); Financial Services Act 1986 (c. 60) section 212(2), Schedule 16

f2

1987 c. 22 as amended by The Banking Act 1987 (Exempt Persons) Order 1989 (S.I. 1989/125)

f3

1963 c. 18; section 1 as amended by the Finance Act 1964 (c. 49), section 26(7) and Schedule 9, and the Post Office Act 1969 (c. 48), section 108(1)(f)

f4

1963 c. 24 (N.I.)

f5

1986 c. 60