CBI: Solvency II pensions proposals will damage UK growth
European proposals to impose Solvency II-style capital requirements on defined-benefit pension funds will harm UK jobs and growth and spark an £800bn equity sell-off, the CBI warns.
A European Commission green paper, published in July last year, aimed to launch a public debate on how to ensure “adequate, sustainable and safe” pensions across the EU.
However the CBI says the proposals, which include an increase in capital requirements and possible pan-European regulation of pension funds, are a “terrible idea”.
CBI chief policy director Katja Hall says: “We need the UK Government to step up to the plate in Brussels and stop the imposition of insurance-style solvency standards on defined-benefit pension liabilities. The Government can do a lot more than it has to date.
“The proposal is a terrible idea, based on a wrong-headed insistence that defined-benefit schemes are the same as insurance contracts. The potential effects are very significant and would undermine the Government’s economic goals.
“We estimate that schemes that comply with Solvency II would need to sell equity worth over £800bn.”
Issuing the DWP’s response to the consultation, which closed in November last year, pensions minister Steve Webb (pictured) said: “We fully support creating a robust and sustainable single market for insurance but we do not believe that the new capital solvency requirements should be applied to occupational pensions.”