The European pensions authority revealed today that new EU proposals could increase UK pension fund deficits to at least £450bn.
The National Association of Pension Funds (NAPF) warned that moving to Solvency II-type rules for pensions would put a huge burden on remaining UK final salary pension schemes and the businesses that run them.
Joanne Segars, Chief Executive, NAPF, said:
“The EU plans for UK pensions come with a clear and unpalatable price tag. Businesses trying to run final salary pensions could be faced with bigger pensions bills to plug an astonishing £450bn funding gap. This would have a highly damaging effect for the retirement prospects of millions of UK workers.
“This project has been conducted at breakneck speed due to the Commission’s ludicrously tight timetable. This cannot be the basis for formulating a policy that could undermine the retirement plans of millions of people both in the UK and across Europe.
“The European Commission needs to rethink its proposals, instead of trying to hurry them through. It would be better to focus on the 60m EU citizens who have no workplace pension, instead of eroding the good pensions already in place.”
The European Insurance and Occupational Pensions Authority (EIOPA) today submitted to the European Commission (EC) the preliminary results of its Quantitative Impact Study (QIS) on the proposed European Pensions Directive based on Solvency II-type rules.
Solvency II is a new regime that applies to insurance companies in the EU. The EC wants parts of it to form the centrepiece of the new Pensions Directive. Solvency II- type capital rules would increase the funding levels required for pension schemes, forcing employers to make bigger contributions.
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