Pressure is mounting on the European Commission to abandon “reckless” Solvency II-style proposals for pensions which could cost UK defined benefit schemes £450bn.
The Commission is considering raising the level of capital DB scheme sponsors are required to hold in reserve in an attempt to protect members’ savings.
The European Insurance and Occupational Pension Authority, an EU regulator, yesterday published preliminary findings outlining the impact the proposals could have. Eiopa estimates the changes will load an extra £450bn in additional funding costs onto UK DB schemes.
Pensions minister Steve Webb says: “The EU’s latest figures show the extremely high cost its plans would place on UK defined benefit pension schemes.
“In fact, its estimate of a baseline £450bn cost is in line with the worst case scenario contained in figures The Pensions Regulator produced for the UK Government last year.
“This confirms that any such new rules would harm businesses’ ability to invest, grow and create jobs, and many more schemes could be forced to close. I continue to urge the Commission to abandon these reckless plans.”
Business trade body the CBI warns the proposals, if implemented, would damage UK growth and job creation.
CBI director of employment and skills Neil Carberry says: “The European Commission must not ignore this warning. Eiopa’s preliminary results show the impact of these proposals are even worse than expected.
“An additional £450bn cash call on businesses would damage growth and job creation, as well as destabilising financial markets.”