UK government to scrap MFR
UK – Chancellor of the Exchequer, Gordon Brown, today (Mar 7) accepted the recommendations of the Myners report on institutional investing in his budget speech to the House of Commons and pledged to scrap the UK’s minimum funding requirement (MFR) for pension funds.
In his report, released yesterday (Mar 6), Paul Myners, chairman of UK investment manager Gartmore called for an enhanced voluntary code of practice for pension fund trustees.
This, he said, would ensure familiarity with the investment issues on which they decide and enable them to manage scheme assets in a “prudent” manner.
He added that it would also encourage investment in asset classes such as private equity – a relatively under invested sector, which the government had asked Myners to focus on.
Brown also said he would be prepared to legislate if the Myners proposals to the pension fund industry were not taken up sufficiently.
Addressing the Commons, Brown said the Myners reforms would promote long-term investment and protect investors - citing the fact that institutional investors were responsible for assets of £1.5trn (e2.4trn).
He added: “We will abolish the minimum funding requirement; through tax and regulatory reform make it easier for life insurers and pension funds to invest in venture capital: and we will ensure both a strengthened role for pension fund trustees and a clearer duty on fund managers to promote beneficiaries’ interests.”
In proposals set out in November last year Myners recommended that the MFR be replaced by a long-term funding solution.