Pensions - Articles - Pension schemes fear Solvency II double deficits

 EIOPA proposals could increase pension liabilities by up to £2.5bn for average FTSE 100 company

 New analysis by Deloitte, the business advisory firm, highlights the high cost for pension schemes of meeting rules proposed by the European Insurance and Occupational Pensions Authority (EIOPA).

 EIOPA is consulting on applying a Solvency II-type framework to EU-based pension schemes and proposing changes to the funding of schemes and risk management processes.

 A Deloitte survey of large pension schemes and their sponsors, representing more than £100bn of liabilities, found that three-quarters believe the proposals will increase gross liabilities by between 20% and 50%. For the average FTSE 100 company this would represent an increase of between £1bn to £2.5bn in liabilities.

 Feargus Mitchell, head of Deloitte’s actuarial & pension services practice, said:

 “Almost without exception, respondents are critical of the proposals. They believe that given the current climate, when pension deficits are already high and the economic outlook is uncertain, now is not the time to introduce new obligations that will incur further expenses and increase deficits. The proposal will be one more factor that will accelerate the decline of defined benefit pensions in the UK.”