The National Association of Pension Funds (NAPF) today responded to the Government’s Balance of Competences Review on the single market in financial services and the free movement of capital.
In its response, the NAPF noted that the UK is disproportionately affected by EU pensions regulation because we have around 60 per cent of the EU’s defined benefit pension liabilities.
Pension schemes are affected by EU regulation both directly through pension-specific EU legislation and indirectly because the costs of complying with the EU’s investment markets legislation are passed to pension fund clients by asset managers, brokers and banks.
Pensions policy is a matter for Member States under the principle of Subsidiarity, but the EU has used the Single Market competence to develop a series of interventions in the pensions area.
James Walsh, NAPF EU & International Policy Lead said:
“It is important to distinguish between the investment markets, which are genuinely international and merit a high degree of regulatory co-ordination at global level, and individual sectors, such as pensions, where patterns of provision are very specific to individual nations.”
Regarding the investment markets, the NAPF recognises the case for a regulatory framework set out (in high level at least) by global bodies such as the Bank of International Settlements and IOSCO, but implemented in detail by EU-level bodies such as ESMA and national regulators such as the FCA. The key challenge for policy-makers is to strengthen the accountability of the global-level institutions.
Mr Walsh added:
“A different, national-level, approach is required for those sectors, such as workplace pensions, where individual countries have very different traditions of provision.”
The current debate about introducing a harmonised, EU-wide funding regime for pensions underlines the point. A Solvency II-based regime would be completely inappropriate for the UK, where we already have a well-developed system of protection for pensions.
Please contact the NAPF press office for our submission of the Balance of Competences Review.
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.
Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]
Aimee Savage Richards, Press Officer (interim), 020 7601 1718 or 07825 171 446, [email protected]