Another warning shot on pensions from the European Commission?
8 July 2010
8 July 2010 – The European Commission yesterday published its Green Paper “Towards adequate sustainable and safe European pension systems”.
Solvency II is a persistent dark cloud on the horizon in the UK pensions landscape. The fear is that defined benefit pension schemes will have to meet the same solvency standards as insurance companies – which would require near buy-out levels of funding and might increase the deficits in UK occupational pension schemes by several hundred billion pounds. If the Commission does have plans like that, the Green Paper does not reveal them. Instead, it seems to accept that any solvency regime for occupational pension schemes should be pensions-specific, and it even asks readers to suggest what it should look like.
Less well covered in the press is the Green Paper’s statement that there are gaps that need closing in EU regulation of money purchase schemes.
Anna Rogers, Head of Mayer Brown's Pensions group, said: “Areas that are being looked at include governance, investment choice, default options and, intriguingly, the volatility of returns. If this is trailing the possibility of minimum guaranteed investment returns, employers can be expected to resist strongly.”
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