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Schemes will have to go public, says consultant

UK – Pension fund managers will soon be obliged to act as if their funding and investment strategies were entirely in the public domain, a pensions and benefits conference organised by UK consultant, Hymans Robertson, has been told.

It was claimed at the conference that the impact of new accounting and funding standards, such as the revised minimum funding requirement (MFR), the Myners review proposals and the introduction of FR17, meant that pension funds had to provide a greater depth of information to shareholders, scheme members and the general public.

Ross Russell, head of Hymans Robertson’s actuarial practice, says : “This degree of disclosure would be unprecedented in the UK, and given increased consumer interest in pension issues, the fact that so many schemes have insufficient assets to secure fully members’ benefits on wind-up may come as an unwelcome shock.”

Russell also underlines what he considers to be misconceptions arising from the Myners’ review. “Myners’ recommendation that trustees appoint actuaries and investment consultants via separate tenders may leave the impression that those two roles are diverging. But the reverse should be the case.”
He believes that the need for investment policies to take full account of the liability profile is greater than ever, as is the need for actuaries to be aware of investment risk when setting contribution rates.

According to Russell, there are three common themes running through the new standards.
•greater disclosure of funded status not only to members and shareholders, but in time, the general public too
•an enhanced need for funding policy to be closely aligned with investment policy and vice versa
•a continued, and perhaps enhanced, focus on whether schemes are funded well enough to meet their discontinuance liabilities.

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