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Merrill Lynch welcomes MFR reform

Merrill Lynch Investment Managers has welcomed reform of the MFR announced in the pre-budget speech last week.

However, Merrill is calling for more consultation with the Government on the proposed alternatives which it believes are unlikely to change the conservatism of trustees and companies.

Merrill says the pre-budget report confirmed the role of trustees in determining investment policies, but claim the new accounting standard FRED20, which will carry the variability of pension costs onto company accounts, is likely to result in companies imposing restraints on investment policy in order to cut down volatility.

Merrill managing director Charles Farquharson says: “The MFR announced on Wednesday may not succeed in encouraging trustees and companies to be more entrepreneurial in their investment strategy.

“We will continue to discuss the suggested alternatives with the industry and the Myners team at the Treasury on this and other issues raised in the Myners review.”

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