MFR uncertainty adds to pressure on long gilts

The move away from long-term gilts will continue in the lead up to the official abolition of the minimum funding requirement, according to John Creet, head of fixed interest at Colonial First State Investments. The rules, introduced in April 1997, mean pension providers must be able to cover their liabilities in the event of bankruptcy. The most common way of doing this has been to buy long-dated gilts. The MFR rules relating to pensions have had a significant impact on the long end of the gilts market, forcing down yields, he says. 'Over three years, the long end of the market ...