Today the Government published a document setting out plans for the next stage of reform of the Minimum Funding Requirement (MFR).
It also announced that a Consultation Panel has been set up with representatives from the pensions industry, consumer organisations, employers and trade unions to take forward the final stages of the reform of the MFR.
Speaking about the Government's proposals to replace the MFR Alistair Darling said: "The protection of pension scheme members is paramount. Our proposals mean that there will be better protection to provide more effective security for members of defined benefit occupational pension schemes."
"To-day I have published details of a package of measures that mean pension schemes can start to move towards this position of more sustainable funding for the long-term."
The Government's proposals to replace the MFR include a long-term funding standard tailored to suit each scheme's situation with a strong regime of transparency and disclosure, and additional measures to strengthen security.
Building on these proposals, the joint DWP/HMT document The Minimum Funding Requirement: The Next Stage of Reform (requires Adobe Acrobat) seeks views on the workability of draft regulations to introduce changes to the current MFR regime as the first stage of its reform. These changes have been developed in the light of representations received since the Government announced its proposals.
The first stage of this reform includes:
- Extending the period in which scheme funding must be made good. This is a move towards the position of better, more sustainable long-term protection for scheme members.
- Removing the requirement for annual recertification for schemes that are fully funded on an MFR basis. This allows schemes that are fully funded to concentrate their efforts and resources elsewhere, while maintaining an annual security check for underfunded schemes.
- Stricter conditions when an employer decides to wind a scheme up voluntarily, which will improve protection for members.
Pensions Minister Ian McCartney said : "We will continue to work with the pensions industry and other interested parties on the final stages of reform to replace the MFR. And today the Government is announcing that it has set up a Consultation Panel with representatives from the pensions industry, consumer organisations, employers and trade unions to help develop the details of the Government's proposals for legislation when Parliamentary time becomes available.
"The Government looks forward to working in partnership with the Panel to develop detailed proposals that are workable and do not have any unintended effects. We will also work with the Occupational Pensions Regulatory Authority and the Financial Services Authority in developing detailed proposals for the Panel. "
Economic Secretary to the Treasury Ruth Kelly said:
"Defined Benefit Pension Schemes are essential to the future security of some 13 million people. Reform of the Minimum Funding Requirement is vital to the future success of these pension schemes. So I am pleased we are able today to take the next steps in the reform of the MFR, improving security for scheme members and making Defined Benefit schemes easier to operate for employers."