The Budget: Pension reforms are promised. But when?

Pension Funds

The wholesale acceptance of the pension reforms proposed in Tuesday's Myners report came as a surprise. But no timetable was set for implementing the report's key proposal, the scrapping of the minimum funding requirement, a way of protecting occupational pension schemes.

The wholesale acceptance of the pension reforms proposed in Tuesday's Myners report came as a surprise. But no timetable was set for implementing the report's key proposal, the scrapping of the minimum funding requirement, a way of protecting occupational pension schemes.

The MFR was introduced in response to the Mirror Group pensions scandal but is now seen as one of the reasons defined benefit schemes are disappearing.

Gordon Brown said it would be replaced with a new, long-term funding standard for pension schemes. This will require primary legislation that could take up to two years to be introduced. The code of practice suggested in the review of the pensions industry by Paul Myners, the chairman of Gartmore Investment Management, is also to be introduced. Many observers were expecting the Chancellor to propose only interim measures.

In line with the Myners report's recommendation, the new pension scheme standard will be a "scheme-specific" regime. Pension trustees and their advisers will be required to assess their scheme's funding according to its own circumstances, with each scheme describing how it sees its liabilities growing over time - and how it plans to meet them - in a public statement.

But the regime also incorporates additional protective measures. If schemes are not adequately funded, they must devise a recovery plan to return to adequate funding inside three years. The scheme's actuary will have a statutory duty of care, in which he or she has a "whistle-blowing role if something goes wrong".

Alan Pickering, chairman of the National Association of Pension Funds, said: "This is the best announcement for employees and pension funds we have had for years. Rather than the one-sided approach of the MFR, the trustee must determine a scheme ... that makes sense for them. The sooner the MFR is dead and buried the better."

Gordon Pollock, a partner at William Mercer, pensions consultants, said: "There had clearly been a lot of background work going on between the Treasury and the Department of Social Security. But there's no timetable here."

The Myners review proposed that pension funds invest more in so-called alternative investments, such as smaller companies and private equity, instead of focusing on outperforming peer group benchmarks. They will also be obliged to take a more active role in company affairs.

Steve Russell, a strategist at the investment bank HSBC, said: "Many will have been surprised by the Chancellor's complete acceptance of Myners."

The market impact of Mr Brown's move will be to reduce demand for gilts and an increase in demand for corporate bonds and more risky types of equity and venture capital.

A Tory spokesman said: "It's all sensible stuff."