UK government reveals MFR abolition plans
UK – The protection of pension schemes members is paramount, says social security minister, Alistair Darling, who today publishes the government’s proposals for the next stage of plans to replace the minimum funding requirement (MFR).
“Our proposals mean that there will be better protection to provide more effective security for members of defined benefit occupational pension schemes,” says Darling.
The comments and document come as the government announces that it has set up a consultation panel of representatives from the pensions industry, consumer organisations, employers and trade unions to take forward the final stages of the MFR reform.
The government’s proposals include the introduction of a long term funding standard to suit individual schemes, with a strong regime of transparency, disclosure and enhanced security.
The joint department of social security and treasury document, “The Minimum Funding Requirement: The Next Stage of Reform”, seeks to get industry views on the workability of draft regulation to introduce changes to the MFR under the terms of the first stage of reform, which include:
* extending the period in which scheme funding must be made good (allowing more sustainable long-term protection for scheme members);
* removing the requirement for annual re-certification for schemes that are fully funded on an MFR basis (allowing resources and effort to be directed elsewhere);
* stricter winding up conditions, leading to improved member protection.
Says Ruth Kelly, economic secretary to the treasury: “Defined benefit schemes are essential to the future security of some 13 million people. Reform of the MFR is vital to the future success of these pension schemes. I am pleased we are able to take the next steps in the reform of the MFR, improving security for scheme members.”