Plans by the European Union to introduce new rules on pensions funding aimed at securing members’ benefits run the risk of undermining pensions provision rather than strengthening it, pension experts warned today.
In a formal response submitted today to the European Commission (EC) Green Paper on Pensions, the National Association of Pension Funds (NAPF) voiced its opposition to proposals for a new solvency regime for pension funds.
The proposed solvency regime could mirror the system that was adopted by the EU for the European insurance industry. The NAPF believes that this would not be appropriate because the pensions industry works in a very different way from the insurance industry.
Joanne Segars, Chief Executive of the NAPF, said:
“The European Commission’s aim of ensuring that EU member states provide strong, adequate and sustainable pensions systems is commendable.
“While a Solvency II type system of regulation is appropriate for insurance, the Commission needs to recognise that occupational pensions operate in a very different way.
“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. Additional solvency requirements on UK schemes would work against the Commission’s objective of promoting adequacy of pension provision and could lead to the further closure of defined-benefit schemes.
“There is a rich diversity of pension provision across Member States. It is important that the European Commission recognises this when thinking about how to meet its core objectives of Member States providing a strong, adequate and sustainable pension system.”
NAPF’s concerns are also shared by the CBI, TUC, ICAEW and the ICAS. In October, NAPF joined these leading UK organisations in signing a joint letter to the European Commissioners to warn them about the dangers of a solvency approach.
The NAPF is working with its European partners in shaping how the European Commission can help Member States best achieve stronger, more adequate and sustainable pensions systems.
Notes to Editors:
Joanne Segars is available for interview
Please contact the press office on 020 7601 1717 or 020 7601 1718 for a copy of the NAPF response to the EC Green Paper.
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]