EUROPE/UK - A high level source at a top international law firm has lashed out at the European Union for protecting a "hidden agenda" against the UK fund management industry.
The source told IPN that he believes that the EU, under the current Spanish presidency, is trying to restrict equity investment levels in a bid to curb the “dominance” of London as an epicentre for equity management, and not because of risk management issues.
The comments follow a meeting of member state delegations last week on the funding issues and investment levels within the occupational pensions directive. The presidential papers were only circulated amongst the delegation, and as yet any outcomes have not been publicised.
It is understood that the equity level could be reduced to less than 50% of a given portfolio.
“[This is] very alarming for the fund management industry in this country.
“Not because we consider it imprudent, but because there seems to be another agenda behind it,” said the source.
He added that any consequent lifting of fixed-income levels would “serve local interests” on the Continent; the move would generate liquidity and “create a captive market to issue [that country’s] own debt.”
The source believed that the eventual outcome will be a “fudged compromise” whereby there would be no quantitative restrictions on a pan-European level. Instead ‘prudent’ investment rules would be left to individual member states to apply.
“This move could kill growth in investment,” said the source.
Recently, a leading UK investment consultancy - which also accused the Spanish of playing out a domestic issue on the European stage - said that any plans to cap high-risk assets would most likely fail.
But critics have hit out the UK pension fund industry for being “xenophobic”.
“The true European pensions agenda is directed by the Dutch commissioner who is completely sympathetic to the British view of funding pensions and the prudent man approach,” said Aon Consulting’s Chris Erwin.
“Our anger is better directed at the domestic enemies of ongoing pensions, particularly of the defined benefit variety,” he added.
By Madhu Kalia
An analysis of IGC annual reports finds some lacking in information on value for money, costs and charges, and investment performance. James Phillips explores the findings
A new cost transparency solution is being developed for pension schemes by a financial services technology firm.
Supermarket giant Asda's plans to reform its pensions have been decried as "unfair, unreasonable and unnecessary" as the workers' union began talks with the employer.
The Pensions Administration Standards Association (PASA) has launched a checklist to help trustees with the rectification process for guaranteed minimum pensions (GMP).