UK - The government is increasing uncertainty at pension schemes by failing to reveal its plans for replacing the minimum funding requirement, consultants claim.
They point out that little has been heard since the government published a consultation document 12 months ago outlining plans to drop the MFR in favour of a “long-term scheme specific funding standard”.
The document also outlined draft regulations to overhaul the MFR in advance of its replacement.
PricewaterhouseCoopers partner John Shuttleworth likened the government’s subsequent silence to the “behaviour of an ostrich”.
He said: “Back in 1997 the abolition of the dividend tax credit exposed the MFR as technically flawed. Yet five years later all we know is that the MFR is going to be abolished some time and replaced by some gobbledygook called a ‘long-term scheme specific funding standard’.”
Barnett & Waddingham partner Colin Richardson also attacked the government, claiming that the lack of information was creating uncertainty at schemes.
He said: “Trustees are saying: ‘We’ve got this MFR issue, how real is it? How long have we got the MFR for?’. It’s an information black hole.”
While the Department for Work and Pensions and the Treasury refused to comment on what will replace the MFR, both said details about the proposed replacement would be published “this autumn”.
Deloitte & Touche head of investment services Tony Osborn-Barker said: “We’ve gone into consultation overload – the government is long on consultation and short on action. Any thoughts it might have had that the profession will say ‘you’ve got this spot on chaps’ is out of the window.”
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