European Commission proposals to harmonise pensions could result in British companies withdrawing pay-linked pensions for employees according to a report in The Times today.
The position of the £650 billion pensions industry in the UK could be seriously undermined if the draft proposals from the European Commission are applied in the UK.
The UK is the only EU member which has a healthy private sector for pension provision, whilst maintaining solvency within the state scheme.
European Commissioners are keen to develop a cross-border pension market in the EU, but in reaching this they are looking to insist on an agreed set of pension fund solvency rules as well as agreed interest rates in calculating pensions.
The UK government is already looking at the issue of solvency rules following the £450 million scandal which came to light after the death of newspaper tycoon Robert Maxwell. The Department of Social Security (DSS) is approaching the close of a consultation period on the Minimum Funding Requirements (MFR) for occupational pensions.
Chairman of the National Association of Pension Funds, Alan Pickering, said: “We have been working very hard to lift the MFR straightjacket in the UK, and would be disappointed if the price of progress in Europe was a straightjacket imposed from Brussels.”
Because of the near non-existant private pensions industry in the majority of EU states, many countries such as France and Germany would be able to start from a clean sheet.
