Pensions - Articles - JP Morgan supports Pensions Minister's Solvency II comments

 Paul Sweeting, European Head, Strategy at J.P. Morgan Asset Management supports the Pensions Minister's comments on Solvency II for Pensions, but warns that it is important to remain constructively engaged:

 "The Pensions Minister is absolutely right to highlight the negative impact that the Solvency II framework would have on defined benefit pension schemes and their sponsors," said Sweeting. "Indeed, we showed that the cost could run into hundreds of billions of pounds for the UK alone. However, if the Pensions Directive is going to be revised, we must remain involved in the discussions to ensure that the result is sufficiently flexible, and takes into account the structures and frameworks in place in each Member State," he continued.

 Sweeting favoured an approach that concentrated on the outcomes experienced by pension scheme members rather than the solvency of the schemes themselves. "A pension protection scheme providing an adequate level of benefits could ensure that the vast majority of pension scheme members received most if not all of the benefits due to them. Such a scheme could keep benefits secure in a more capital efficient way than the imposition of short-term solvency requirements. And if a member state had coverage from such a pension protection scheme in place, it could be argued that strict solvency requirements were less important. But to make this case to the European Commission, we need to stay engaged, and give the constructive input needed to reach a workable solution."