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IMA fears Euro crackdown on DC pension investment

John Lawson

The Investment Management Association has warned the European Commission may be tempted to bring forward prescriptive regulation for defined-contribution pension investments.

In March, the European Commission issued “a call for advice” to the European Insurance and Occupational Pensions Authority as part of a review of the institutions for occupational retirement provision, or IORP, directive.

The call for advice focuses on the potential to introduce increased solvency requirements for defined-benefit pension schemes, similar to Solvency II for insurers, and defined-contribution regulation.

On DC, it says: “Specific attention should be paid to DC schemes that do not offer a principal and/or investment guarantee. It is important to consider whether the IORP directive needs to be adjusted to better address the specific needs for the regulation and supervision of DC schemes.”

IMA head of research Jonathan Lipkin says: “The European Commission has slipped in quite a broad-ranging set of questions on DC into its call for advice. In the context of a very rapid transfer of risk to individuals, it is understandable that some policymakers are asking questions about whether that risk can be managed differently.

“The concern is that there will be a temptation to try to go further than is practical at a European level and try to come up with catch-all approaches to DC regulation.”

The call for advice followed a green paper from the commission on the future of pension provision across Europe, which was published in July 2010. A white paper is expected to be published in December.

Standard Life head of pensions policy John Lawson (pictured) says: “I would expect the commission to back off from prescribing anything on DC investments. We will try to influence Eiopa to make sure there is nothing untoward for DC in the commission’s white paper.”

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  1. It never ceases to amaze me that the politicians and bureaucrats who have presided over some of the worst financial scandals and crises in history still seem to think that they know best. Apart from pushing up the cost to the consumer, thereby reducing returns, what has the last 10 years of regulation actually achieved? These are people who cannot even be trusted to manage their own financial affairs as the failure to have their accounts signed off demonstrates and whose use/misuse of expenses has consistently been called into question. Why would any sane person trust them to regulate anything?

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