Controversial pension plan shelved

Express & Star
May 23, 2013

Pensions Minister Steve Webb welcomed EU Commissioner Michel Barnier’s decision to postpone plans to impose the rules, known as Solvency II, on defined benefit (DB) pension schemes.

Fears had been raised that the rules would add as much as £400 billion on to UK pension shortfalls.

The European Insurance and Occupational Pensions Authority (EIOPA) had been looking at rules to assess the solvency of pension funds, which providers said would ramp up their costs as more funding would need to be injected. [EXPAND Read more]

The Commissioner said he will not present proposals this autumn to bring in new capital requirements for occupational pensions, though he would focus on governance, transparency and reporting requirements.

The National Association of Pension Funds (NAPF) said the solvency rules will become a task for the next commissioner who will take office in November 2014.

Minister for Pensions Steve Webb said: “This is a welcome move by the commissioner, and is hopefully a sign he may eventually abandon his damaging and reckless plans altogether.

“Introducing Solvency II-style rules for defined benefit pension schemes would push up liabilities by up to £400 billion, harming businesses’ ability to invest, grow and create jobs, and put more schemes at risk. The UK has been making the case against the plans for some time, with growing international agreement. The signs are we are winning the argument.”

James Walsh of NAPF said: “The great diversity of pension systems across the EU makes it very difficult to devise a ‘one size fits all’ system. We welcome Commissioner Barnier’s sensible decision not to go ahead with new rules on pension scheme funding. This is good news for British pension schemes.

“The proposals could have increased UK defined benefit pension deficits by 50%, causing great damage to pension schemes and their sponsoring employers.” [/EXPAND]