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NAPF and Eiopa clash over Solvency II for pensions

The National Association of Pension Funds and Eiopa have clashed over plans to increase capital requirements for pension schemes across Europe.

Eiopa is an advisory body to the European Union. It has put forward proposals to reform the Institution for Occupational Retirement Provision, or Iorp, directive with the introduction of a “holistic balance sheet” for occupational pension schemes.

Industry experts and the Government are concerned the changes will force sponsors to increase funding levels and will lead to further closures of defined-benefit schemes in the UK.

Speaking at the NAPF conference in Liverpool last week, NAPF chairman Mark Hyde Harrison said the proposals will cost defined-benefit pension schemes £300bn.

He said: “The argument goes that just as the banks have proved to be unstable, with dire consequences for us all during the crisis, so too are insurance companies – and therefore so too are pension schemes.

“While I hear Commissioner Barnier say there will be no ‘copy and paste’ of Solvency II for insurers to pension schemes, I am far from convinced.

“When I look at the wording of the Commission’s proposals, while the proposals are not a copy paste, they are too close to comfort for my liking.

“Rather than improve pensions security, this would damage it in the UK and elsewhere in the EU.”

However, Eiopa chairman Gabriel Bernardino hit back, saying pension schemes would not be treated in the same way as insurers.

He said: “There will be no copy and paste of Solvency II for pensions. There seems to be a lot of confusion about this.

“We have not even started to look at details of which assets will be needed to cover which liabilities, so every time I hear people saying this will kill pension funds or make deficits and funding levels crazy, that is not reality.”

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