View more on these topics

Steve Webb attacks ‘devastating’ £400bn impact of Solvency II

Steve Webb 480 LibDems DWP

Pensions minister Steve Webb has lashed out at the “devastating” impact of Solvency II proposals, arguing it could add up to £400bn to UK pension liabilities.

Speaking to the European Retirement Federation in Frankfurt today, Webb warned the “dangerous, reckless” and “wrongheaded” proposals would have a “devastating” impact.

The European Commission plans to impose Solvency II capital requirements on pension providers. The Department for Work and Pensions says new rules are likely to increase shortfalls on final salary schemes by £150bn but could end up costing as much as £400bn.

Webb said: “This would harm businesses’ ability to invest, grow and create jobs, and many more schemes could be forced to close.

“We are urging Brussels not to pursue these dangerous, reckless plans. In Britain, we are making reforms to ensure our pension system is sustainable. In Europe, we should be working together to tackle real pension challenges, and find ways of better sharing the risk of providing pensions between the employer and employee.”

DWP data shows that over the next 20 years the percentage of defined benefit schemes open to new members would collapse from 16 per cent to 5 per cent, and those open to existing members from 58 per cent to under 25 per cent.

Labour business secretary Chuka Umunna has previously hit out at Solvency II for the potential damage to economic growth and called for cross-party consensus.

Eiopa, an advisroy body to the EU, has said it will not “copy and paste” Solvency II proposals for pensions and any claims that it will increase pension deficits are “crazy”.

National Association of Pension Funds chief executive Joanne Segars threw its support behind Webb’s attack.

She says: “The UK has one of the strongest pension protection systems in Europe already and does not need this regulation. Instead the Commission should focus its activities on other aspects, like pensions governance and communications.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Gordon Brown got rid of DB schemes bar the counting of time. Okay so the EU is a sledge hammer to finish off the schemes sooner than he had time to enact.
    I’m surprised the pro EU and Gordon Brown follower would have an issue, opportunism me thinks.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com