The European pensions authority (EIOPA) is pursuing the wrong priorities in developing the Holistic Balance Sheet concept and should instead focus on extending workplace pensions to the 60 per cent of EU citizens who currently have no access to one, argues the National Association of Pension Funds (NAPF) today (Thursday).
In its response to the European Insurance and Occupational Pensions Authority Discussion Paper on Sponsor Support Technical Specifications, the NAPF states its opposition to the Holistic Balance Sheet. It says that the EU should ensure the regulatory system supports the extension of workplace pensions, rather than increasing regulatory burdens for existing pension schemes that employers have set up voluntarily. This should include extending the use of Institutions for Occupational Retirement Provision (IORPs) more widely across the EU.
However, given that EIOPA is continuing with this work, the NAPF has set out how EIOPA should radically alter its proposals. It argues that the EU is approaching this work in the wrong order, saying that the first step should be to establish whether the Holistic Balance Sheet would be used as the basis of a new funding regime. It advises that the EU should leave pension protection to Member States under the principle of subsidiarity, as long as they comply with EU legal requirements. It argues that there is no Single Market or freedom of movement case for a harmonised EU-wide system of workplace pension regulation.
James Walsh, NAPF’s EU and International Policy Lead, said: “There is no justification whatsoever for the Holistic Balance Sheet. Instead of tinkering unnecessarily with existing regulations for pension schemes, the EU should be pursuing policies which will help the majority of EU citizens to save into a workplace pension and make a real difference to the retirement prospects of millions of people.”
The NAPF says that the proposal wrongly equates pension schemes with insurance products and tries to apply the same regulation to each. It also states that assessing sponsor support is about more than financial data alone and that EIOPA should follow the example of The Pensions Regulator in the UK in recommending that trustees take account of a wide range of factors. These include the sponsor’s future business plans, its ability to draw on contingent assets and the strength of the relationship between scheme and sponsor.
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
2. Please download the NAPF response to the EIOPA Discussion Paper on Sponsor Support Technical Specifications.
3. In July this year, EIOPA confirmed that the Holistic Balance Sheet (commonly known as Solvency II-type proposals) would increase UK pension fund deficits by around £150bn to at least £450bn.
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