The revision of European Union pensions legislation that could lead to new capital requirement rules being placed on UK funds is being rushed through to stick to a political timetable, the National Association of Pension Funds claimed yesterday.
Responding to a consultation launched by European regulators that will feed into the revision of the Institutions for Occupational Retirement Provision Directive, the NAPF said it was 'astonishing' that it had only been given six weeks to address 'very complex and technical issues'.
The European Insurance and Occupational Pensions Authority consultation, which was launched in June, sought views on how the regulator should measure the impact of the revision on pension funds.
Employers, workers and pension funds have already raised concerns that the revision of the directive could affect pension provision if the capital requirements involved are too similar to those being introduced for the insurance industry under Solvency II.
NAPF policy director Darren Philp reiterated this concern yesterday. 'Solvency II-type proposals could have extremely damaging consequences for our pensions and the wider economy. They would hit businesses running final salary pensions, and would also take jobs and investment out of the UK's faltering economy.
'We are concerned that the quality of policy-making is being driven by the political timetable, rather than by a commitment to getting it right. These are long-term issues and the EC should take the time to address them properly, rather than rushing them through.'
Mr Philp raised particular concerns over the 'holistic balance sheet' which EIOPA has advocated as provide a single Europe-wide risk based supervisory regime for pension schemes.
'Crucially, the consultation does not answer the key question of how the holistic balance sheet will be used in practice. Will it form a new funding regime, or will it simply be a disclosure item for trustees?' he asked.
'The consultation also throws up completely new concepts, such as the question of how to value pension protection schemes and employer support for a pension scheme. These issues deserve their own round of QIS.'
In its response to the consultation, Insurance Europe welcomed EIOPA's plans to take Solvency II as the benchmark for regulation pensions, which it said would also take into account the specific characteristics of pension funds such as employer covenants.
Michaela Koller, director general of the group representing insurers across Europe, said: '
'It is important to thoroughly test the applicability of the Solvency II principles to IORPs, taking appropriate account of any economically significant differences between different providers. We therefore consider the quantitative impact study to be a necessary step in the process of reviewing the IORP Directive.'
In particular, Insurance Europe highlighted the importance of addressing how long-term guarantee products are treated under the revised legislation. 'Appropriate solutions have to be found for these fundamental issues and these solutions should then be applied consistently in the Solvency II Directive and the IORP Directive,' said Ms Koller.