EU pension solvency rules a threat to UK schemes
by Gill Montia
Story link: EU pension solvency rules a threat to UK schemes
Plans by the European Union to introduce new rules on pension funding run the risk of undermining pension provision, rather than strengthening it.
The warning comes from the National Association of Pension Funds (NAPF) in response to a European Commission Green Paper outlining a new solvency regime for pension funds.
The proposed regime could mirror the system that was adopted by the EU for the European insurance industry; however, NAPF believes that this would not be appropriate because the pensions industry works in a very different way from the insurance industry.
According to the Association’s, chief executive, Joanne Segars: “The UK pension system already provides a strong system of member protection through the strength of the employer covenant, the work of the Pensions Regulator and the safety net provided by the Pension Protection Fund.”
Ms Segars therefore argues that additional solvency requirements on UK schemes would work against the Commission’s objective of promoting adequacy of pension provision, and could even lead to the closure of defined-benefit schemes.