The government is threatening to use legislation to force pension funds to make statements of non-compliance to the recommendations of the Myners’ Review, warned Paul Myners, speaking at the Pensions Management Institute (PMI) Autumn conference in London.
Myners told the conference that whilst no institution was actually obliged to comply with the findings of his review, the government may legislate to make statements of non-compliance compulsory if it doesn’t see enough movement towards adopting some or all the Myners recommendations during the next two years.
Ian Eggleden, president of the PMI, suggested that small funds – those up to £100m (€160m) – wouldn’t be able to comply because of the potential costs involved.
Myners, however, didn’t see the issue as a matter of cost and stated that areas of his review such as evaluating consultants and managers could be done as easily as inviting them to make presentations – with no real cost involved. “Frankly I am disappointed to see few pension funds yet willing to rise to the challenge,” he commented.
Elsewhere, Myners dismissed as “nonsense” the notion that fund managers would have to be paid more for any extra work that his recommendations may imply, so long as it falls within normal working schedules. “It is already one of the highest paid industries and I probably won’t be very popular after saying that they don’t need any more money.”
Though Myners said the review has been warmly welcomed by both industry players and the government, there was some criticism.
Steve Mingle, group pensions and benefits director at food and drinks giant, Diageo, said that the term ‘rational’, as used by Myners in reference to pension funds’ investment strategies, needed to be more clearly defined and wondered if industry expectations about the review and what it could achieve were realistic. “Can one paper prepared in a few months really offer solutions to fundamental problems that have been inherent in the industry for years?” he asked.
Mingle did, however, acknowledge that the review had opened the way to continued debate and that it provided a platform for reform and change.