New Clause 34: Pension Schemes Bill
New Clause 34 - Exemption from public procurement rules
“(1) After paragraph 2 of Schedule 2 to the Procurement Act 2023 (general vertical arrangements exemption from public procurement rules) insert—
2A “(1) A contract between a local government pension scheme manager and an asset pool company providing for the company—
(a) to manage the funds and other assets for which the scheme manager is responsible,
(b) to make and manage investments on behalf of the scheme manager, and
(c) if the contract so provides, to carry out other investment management activities for or on behalf of the scheme manager,
if each of the conditions set out in sub-paragraph (2) is met.
(2) The conditions are—
(a) that more than 80% of the activities of the company are investment management activities carried out for or on behalf of local government pension scheme managers;
(b) that no person exercises a decisive influence on the activities of the company (either directly or indirectly) other than—
(i) the participating scheme managers in the company, acting in their capacity as local government pension scheme managers, and
(ii) where the only shareholder in the company is another company (see section 1(9)(a) of the Pension Schemes Act 2025), that other company;
(c) that the company does not carry out any activities that are contrary to the interests of—
(i) the participating scheme managers in the company, in their capacity as local government pension scheme managers, or
(ii) where the only shareholder in the company is another company, that other company.
(3) The contracts covered by this paragraph include a contract where the local government pension scheme manager concerned is already a participating scheme manager in the company (as well as one where the scheme manager concerned will become a participating scheme manager in the company as a result of entering into it).
(4) An appropriate authority may by regulations make provision about how a calculation as to the percentage of activities carried out by an asset pool company is to be made for the purposes of sub-paragraph (2)(a).
(5) For the purposes of sub-paragraph (2)(b), a person does not exercise a decisive influence on the activities of the asset pool company only by reason of—
(a) being a director, officer or manager of the company, acting in that capacity, or
(b) where the only shareholder in the company is another company, being a director, officer or manager of that other company.
(6) In this paragraph—
“asset pool company” has the meaning given by section 1(7)(a) of the Pension Schemes Act 2025;
“investment management activities” means activities involved in or connected with the management of funds or other assets for which a scheme manager is responsible (including making and managing investments on behalf of the scheme manager);
“local government pension scheme manager” means a person who is, by virtue of section 4(5) of the Public Service Pensions Act 2013, a scheme manager for a pension scheme for local government workers in England and Wales;
“participating scheme manager” , in relation to an asset pool company, means a local government pension scheme manager who participates in the company within the meaning of section 1(9)(b) of the Pension Schemes Act 2025.””—(Torsten Bell.)