When Chancellor of the Exchequer Gordon Brown announced last March that Paul Myners, chairman of Gartmore Investment Management, would oversee a thorough review of U.K. institutional investment, many observers expected immediate and wholesale changes. But so far the review hasn,t lived up to the anticipation.
In November Myners recommended the abolition of the so-called minimum funding requirement, a solvency test for pension funds that promotes very conservative investment habits. The abolition didn,t go far enough, in the eyes of many money managers. Says Charles Farquharson, who heads Merrill Lynch Investment Managers, “The MFR alternatives announced may not succeed in encouraging trustees and companies to be more entrepreneurial in their investment strategy.” Managers like Farquharson feel that additional incentives, such as revised tax guidelines, might do more to spur diversified investing by pension funds.
Myners counters that the review process is far from over. His final report, due in March, must first be presented to the Treasury. He adds that he’s fully aware that getting rid of MFR is only a first step. “Abolition of the MFR is an enabler,” he says.
As for concerns that his report won,t go far enough, he says his brief “was very wide-ranging, so you can reasonably expect that the final report will reflect that.”
