This morning the Treasury and DSS jointly published the eagerly-awaited Myners Review. A press summary is also available.

Taking into account over 200 responses to his May 16 consultation document, Paul Myners advises the Chancellor and the Secretary of State for Social Security that the MFR should be scrapped. He argues cogently that, aside from the distortions and costs the MFR causes, it was fundamentally misconceived and fails as a form of protection against underfunding. The MFR assumes a ‘one-size-fits-all’ standard, whereas underfunding is a matter of judgement, crucially dependent on assumptions about future investment returns - which are both subjective and fund-specific.

Myners proposes trustees should be much more involved in debating investment assumptions and setting asset allocations, reporting annually to beneficiaries (and the public, via Opra) via a ‘transparency statement’. This would be much more informative than the present (often bland) Statement of Investment Principles, and could be formally challenged by the beneficiaries or ultimately by Opra. As an additional protection for smaller funds - those with fewer than 4,000 members or less than £250 million, perhaps - Myners proposes formal scrutiny by the scheme actuary.

The inadequacies and impracticalities of the various alternatives to the present MFR set out in the DSS/Treasury Consultation Document are also discussed. Myners might be stepping on the toes of some powerful vested interest groups in the industry, but there are good grounds for wishing that his proposals for replacing the MFR are warmly received by the Government - and indeed implemented, the swifter, the better.

To address the risk of fraud (which notwithstanding Maxwell, the original impetus for the MFR, is very rare) Myners proposes extending the Pension Compensation Scheme to more closely cover the cost of non-pensioner accrued rights. He also proposes that funds should be required to appoint a custodian independent of the employer.