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MFR: 'transitional period' extended to 5 April 2006
by Ian Neale 23/11/2004 Printer-friendly version of this page
The MFR's life support system will remain operational until 5 April 2006, via amending regulations laid today (SI 2004/3031 The Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Amendment Regulations 2004). The new Regs, which come into force on 21 December 2004, reflect the policy intention in September's consultation draft, with minor adjustments to the wording. (For discussion of the rationale, see our earlier news item).
This further extension to the 'transitional period' (ie the period which commenced on 6 April 1997, and would otherwise have expired at the end of this year) is necessary because the new scheme funding requirements to replace the MFR in Part 3 of the Pensions Act 2004 are not expected to be commenced before September 2005 (in line with the EC Pensions Directive 2003/41/EC).
We understand that on one point in the consultation draft which was not part of the draft Regs, responses were evenly divided. It concerns schemes whose next MFR valuation will have an effective date between 18 November 2004 (= date of Royal Assent to the Pensions Bill) and the coming into force of the new scheme funding requirements. The DWP suggested it would be reasonable to allow trustees the option of deferring the effective date, so it could take place under the new rules. As a result of the even split of opinion, the matter is being referred to the Minister responsible for a policy decision.
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