Giving evidence to the House of Commons Work and Pensions Select Committee today, the ABI committed to continuing dialogue with Europe on pension initiatives but cautioned against making changes at a European level that could impact UK pension reform.
Maggie Craig, Director of Financial Conduct Regulation, ABI said:
“Improving pension outcomes for consumers is immensely important given the tremendous demographic challenge Europe is facing. The ABI believes the European Commission has a vital oversight role to play in addressing challenges in pension provision.”
This is a crucial year for the UK pensions industry. The ABI is a strong supporter of the pension reforms in the UK, in particular automatic enrolment, and has urged the European Commission not to engage in any activity as part of its pension policy that could derail these reforms or undermine them in any way.
The ABI believes that there needs to be further consideration and analysis around plans to read across aspects of Solvency II to the IORP Directive. Commenting on this issue, Maggie Craig said:
“The primary objective of any changes to the IORP Directive must be to improve pension outcomes and should be in line with the Commission’s objective of achieving adequate and sustainable pensions. We believe that requiring increased capital, reporting and disclosure requirements would add considerable burden to employer sponsored pension schemes. There are wider economic effects to consider in this debate including the impact on investment, growth and jobs in the market especially in the current climate.
“When considering Solvency II as a benchmark for amending the IORP Directive, it must be emphasised that, in the UK, pensions offered by insurance companies and employer sponsored occupational pension schemes are not the same and these differences merit different regulatory approaches.
“In the UK, defined benefit pension schemes must meet funding standards and the pension protection fund protects members if schemes fail. As a result, we believe there are already appropriate and suitable levels of beneficiary protection in this area.”
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