Brussels is set to create a pensions disaster for Britain

Commentary feature. John Hutton, a former Secretary of State for Work and Pensions in an earlier Labour government, writes 'Too many people in the United Kingdom are not saving anything for their retirement and those who are saving are not putting enough aside. But if things were not bad enough, European policy makers are about to make them a whole lot worse.

In February 2012, the European Commission confirmed its intention to adopt new standards for pension schemes. These standards will be based on the Solvency II regulations – a wide-ranging overhaul of capital requirements and corporate governance – which apply across the insurance industry.

In attempting to protect members of pension schemes, the Commission runs the risk of accelerating the demise of defined benefit pensions across Europe. Pressing ahead with these reforms will see the closure of high quality, well-funded defined benefit schemes, which will, inevitably, be replaced by schemes with inferior benefits. What on earth is going on in Brussels?

The European Commission responded to this feature in a letter from European Commissioner Michael Barnier published in the FT on the 7 August 2012 (see related url hyperlink).

ESO: Background information: Pension reform threat to funds http://www.europeansources.info/record/pension-reform-threat-to-funds/

Website: European Insurance and Occupational Pensions Authority (EIOPA) https://eiopa.europa.eu/home/index.html

European Commission: DG Internal Market and Services: EU Single Market: Insurance and Occupational Pensions http://ec.europa.eu/internal_market/insurance/index_en.htm

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