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United Kingdom
The death-nell for the MFR
It seems that the Minimum Funding
Requirement (MFR) is to be consigned
to history. The Myners interim report
recommended its abolition and, of the
submissions subsequently made to
Government, the majority were
against retaining the funding
standard, even in a modified form.
The Government has acted swiftly in
response to the views expressed. In a
paper issued just after the Budget, it
sets out a plan to abolish the MFR
and replace it with funding standards
tailored to individual schemes and
employers. No commitment on timing
is made as it will require primary
legislation when parliamentary time
permits. In the meantime, the MFR
will continue in force. Highlights of
the proposal are:
- a funding standard specific to each
scheme, determined on a long-term
ongoing basis
- possibly a change in the roles of
employer and trustees when deciding
the contribution level – the paper is
vague on how this will operate
- a statutory duty of care imposed
on scheme actuaries
- tight deadlines for remedying
under-funding
- increased liabilities for solvent
employers who discontinue plans and
also, possibly, for insolvent employers.
A detailed discussion of the proposals
are available
here.
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The news contained in the
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Multinational is drawn from the News and Issues section of the Watson Wyatt website.
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