MFR can still fall short

falls in equity markets leave winding up direct benefit schemes with a funding shortfall

Final salary schemes, fully funded based on minimum funding requirement (MFR) rules, can still fall dramatically short of promised benefits if wound up in today's market conditions. Employers attempting to wind up defined benefit (DB) schemes could be faced with an additional contribution of between 50% and 100% of the MFR to guarantee benefits for members still to retire, according to pensions development director at Scottish Equitable Stewart Ritchie. As the implied MFR asset mix for members with 10 or more years to retirement is 100% in equities, any life office would be likely to ...