The European Commission has dropped its plans to include solvency requirements in a pensions directive, which official figures show could have required an injection of an extra Â£450 billion into UK schemes.
Although the Institutions for Occupational Retirement Provision (IORP) directive will still be updated it will not now cover solvency requirements but will aim to improve transparency and governance of pensions schemes within the EU.
Charles Cowling, Director, JLT Employee Benefits said:
“Michel Barnier’s announcement must be heralded as good news across the board. There is no doubt that this is an excellent outcome for the pensions industry and I’m extremely supportive of Barnier’s decision not to hamstring pension schemes with overly onerous and unnecessarily complex funding rules.
“As most insurers have been bemoaning, Solvency II has cost the insurance industry hundreds of millions of pounds/euros to little effect. The now- postponed funding rules for pensions could have been even more costly for pensions. Lest we forget that Solvency II has yet to be implemented for the insurance industry, indeed the new regulations’ implementation deadline continues to be kicked down the road. The EU needs sort out the insurers first before it tackles pensions. In the meantime the regulators should focus on better governance, risk management and communication to all parties.”