‘Solvency II could blow pensions landscape apart’
The European Union’s Solvency II plans will have unintended negative consequences for all European pension funds, the Federation of the Dutch Pension Funds has claimed.
Speaking during a panel session at the National Association of Pension Funds’ Europe Pensions Conference in London last week, Jasper Kemme, spokesman for the federation, explained the threat posed by Solvency II.
He said not only would the incoming Institutions for Occupational Retirement Provision directive affect the reforms the Dutch were pushing through, but also the European Commission had not considered whether the various directives would ensure the future stability for pensioners.
Also speaking at the conference, Joanne Segars, chief executive of the NAPF, said: “We desperately need to get people saving more, and building up a workplace pension should be a big part of any retirement strategy. We also need to sort out our state pension system by making it simpler and more generous. At the moment the threat of means testing acts as a deterrent to saving.”
Paul Dixon, chartered financial planner for London-based Census Financial Planning, said: “What’s being proposed by Brussels could blow the pensions landscape apart. If Solvency II rules are forced upon defined benefit pension schemes, they would be required to hold sufficient assets to cover the cost of buying an annuity for every scheme member at all times.
“This will force companies to divert cash earmarked for investment and growth into DB schemes even though these liabilities fall over a considerable period of time. The concern is that if this cash isn’t invested for growth then it could put back the economic recovery.”