Security for Occupational Pensions, and the Minimum Funding Requirement

MFR valuations - money purchase benefits

The Pensions Board became aware that changes to two separate sets of regulations resulted in the exclusion of money purchase liabilities and assets from MFR valuations.

• on 6 April 2005 The Occupational and Pension Schemes (Winding up etc) Regulations 2005 (SI2005/706) removed money purchase liabilities;
• on 31 August 2005 The Occupational Pension Schemes (Winding up) (Modification for Multi-employer Schemes and Miscellaneous Amendments) Regulations 2005 (SI 2005/2159) removed money purchase assets.

As GN27 did not reflect these changes, the Pensions Board looked urgently into this compliance issue. (September 2005)

Review of the MFR basis Feb 2003 [pdf]
Letter to Mark Heholt, DWP

MFR interim changes - impact on GN19 calculations Apr 2002

Review of the MFR basis Oct 2001 [pdf]
Response from the DWP to the Pensions Board's letter Sep 2001 [pdf]

MFR: The next stage of reform Oct 2001 [pdf]
The proposed package of interim measures and introduction of regulation 11. Note for members only issued by the Pensions Board

Security for occupational pensions Sep 2001 [pdf]
Some thoughts on the many issues that will need to be addressed in the coming review of the framework to follow the MFR.
Covering letter to the DWP Sep 2001 [pdf]

Review of the MFR basis Sep 2001 [pdf]
Letter to the DWP

Review of the minimum funding requirement (MFR) - interim changes Oct 2000 [pdf]
Letter to Scheme Actuaries from the Chairman of the Pensions Board

Pension liabilities (further explanation referred to in the above letter)
The attached paper, containing a proposal for solving the MFR caps and collars problem, is a working document produced by two members of the Technical Support and Research Committee of the Pensions Board in March 1999. It was considered by the Pensions Board and the proposal has evolved into that currently being considered by the profession. An excel spreadsheet, which contains the formula and should be straightforward for anyone to use, is also attached. Neither the paper nor the spreadsheet incorporate the interpolation between 0% and 5% inflation index-linked gilt yields, as this was a late change to the proposed formula. Nevertheless, the spreadsheet remains usable and the paper contains the main elements of the formula behind the current proposals

A proposal for amending GN27 Appendix 2 Paragraph A: a methodology for producing pension increase assumptions for current pensioners for MFR purposes, in particular dealing with the problem of increases with floors and caps [pdf]

Model to calculate pension increase assumptions with caps and/or floors [pdf]
(Also available as an excel file)

Review of the minimum funding requirement Sep 2000 [pdf]
A report from the Pensions Board to the Secretary of State for Social Security

• Executive summary [pdf]
• Communication of MFR and solvency Nov 1999 [pdf]
  Working Party Report

GN27: Retirement benefit schemes - minimum funding requirement Jun 1999 [pdf]

Links to associated documents

A central discontinuance fund for pension schemes. Staple Inn Actuarial Society. Oct 1999 [pdf]

Consultation

• Letter to Home Fellows and Associates announcing a series of discussion and consultation meetings Sep 2000 [pdf]

Members only

• Details of the modelling work to test the proposed MFR Aug 2000 [pdf]