The European Commission has delayed introducing Solvency II-style capital requirements for defined benefit pension schemes which were estimated to cost DB schemes £450bn.
Proposals from the commission requiring DB scheme sponsors to hold extra capital in order to better protect occupational pension savers sparked an industry fightback last month, with pensions minister Steve Webb, the Confederation of British Industry and the National Association of Pension Funds all uniting against the plans. The NAPF has said the proposed changes are “highly damaging” for UK savers.
The plans were set to be introduced through changes to the Institutions for Occupational Retirement Provision directive.
Speaking at a conference in the Netherlands today, European Commissioner for Internal Market and Services Michel Barnier said more research is needed before introducing the new capital requirements.
Barnier said he will first focus his legislative proposals on the governance, transparency and reporting requirements for occupational pension funds, which he will set out in the autumn.
He said: “This proposal will not cover the issue of solvency rules for pension funds, which will for the time being remain an open issue. In my view, the situation should be re-examined once we have more complete data. I emphasise that with regard to solvency rules, we must not lose sight of the need to guarantee in the longer term a level playing field between different providers of occupational pensions.”
Barnier called on countries with undercapitalised pensions to take the necessary steps to boost schemes’ capital “without delay”.
He added: “As I have often said, my priority is to protect future pensioners. We must face up to the weaknesses in some occupational pension funds. However, I have no desire to penalise national systems which work well. And I especially do not want, in the current fragile economic situation, to harm the ability of pension funds to play their role as long-term investors.”
PensionsEurope, which represents national associations of pensions funds, has welcomed the move.
PensionsEurope secretary general and chief executive Matti Leppälä says: “Commissioner Barnier has made the right decision as it is vital to take more time for a thorough analysis of the effects of possible changes in solvency rules, which differ greatly between member states.
“European pension funds have to be able to contribute to the growth of the European economy and employment and the solvency rules have to enable this.”