Release by the European Commission (EC) of a White Paper An
Agenda for Adequate, Safe and Sustainable Pensions in
February has been hailed by European insurance federation, Comité
Européen des Assurances (CEA) as a major step in the right
direction.
For UK companies struggling against huge odds
to support their defined benefit (DB) pension schemes it could
spell a financial disaster.
Go deeper with GlobalData
In the White Paper the EC commits itself to a
review the Institutions for Occupational Retirement Provision
(IORP) Directive with a view applying the Solvency II regime for
insurers to pension funds.
In a statement the CEA notes that it
“especially welcomes” this commitment by the EC as a key step to
create a “level playing field” between insurers and pension
funds.
“The Solvency II principles are appropriate
for pension funds, provided the economically significant
differences between pension products and schemes are taken into
consideration,” states the CEA.
The CEA continues: “This should ensure a
comparable approach to all providers of complementary retirement
savings, be they insurers or IORPs.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“The review should not only help to remove
cross-border barriers but also increase consumer confidence through
enhanced transparency and the application of risk-based solvency
principle
Regulatory burden
The burden of Solvency II regulation of
pension funds would fall heavily on companies in the UK and
Netherlands which account for about 50% and 25% of occupational
pension fund assets in the European
Union, respectively Estimates of the
additional costs of Solvency II regulation would place on UK
companies sponsoring DB pension funds range from one of £100bn
($158bn) made by UK pensions minister Steve Webb to one of £600bn
by JP Morgan Asset Management.
JLT Pension Capital Strategies’ estimate is an
even more staggering £1trn. Opposition to the EC’s proposal is not
confined to within the UK. The European Federation for Retirement
Provision has also voiced its opposition to Solvency II being
applied to pension funds, warning that it would impede economic
growth and job creation.
