UK/EUROPE - The UK's Engineering Employers Federation (EEF) is considering speaking out against the European pensions directive.
Up until now the EEF has been supportive of the directive as some of its members want to create pan-European pension schemes but the EEF now feels the changes being proposed for pensions are not clear - especially with regard to the level of funding required compared to liabilities. The Spanish presidency is pushing for 100% funding.
The EEF has written to both the Treasury and the DWP expressing its concerns. EEF deputy director of employment policy, David Yeandle, said: “The time may come when we stop being quietly supportive of the directive and have to come out against it.”
Yeandle also said European legislation is muddied on whether pensions are included as deferred pay in the directive on part-time workers rights and this needs to be cleared up now.
In its response to the Department for Work and Pensions/Inland Revenue consultation on annuities the EEF has called for the establishment of a ‘central annuities bureau’, funded by annuity providers, to give comprehensive information to individuals making decisions about purchasing an annuity.
This information should include a range of market rates for different forms of annuities and sources of financial advice to assist individuals' decision making, said the EEF. The EEF said the bureau could be a government agency.
However, the EEF rejected the idea that employers should be required to provide this type of information or give financial advice to employees about the purchase of annuities as it raises the spectre of mis-selling and would be yet another administrative burden for employers.
The EEF is also not supporting calls to raise the age at which annuities have to be purchased or to allow individuals to extract some capital from their personal pension fund. It believes that making these changes would inevitably increase legislative complexity at a time when the EEF hopes that Alan Pickering's review will result in the simplification of private pensions legislation.
On the subject of the simplification review Yeandle said his understanding was that the MFR replacement and simplification would be bundled together into one Act to be announced in the Queen’s speech in the autumn.
The EEF also said the earnings cap should be looked at in the review as at the moment it deters directors and executives from being members of their own DB schemes and this lack of interest by management in their won company final salary schemes is another factor in the shift from DB to DC. However, Yeandle doubted a Labour government would get rid of the earnings cap.
The EEF is also pushing hard for simplification of the facility for individuals to move from full to part-time employment at the same company and simultaneously begin to draw a pension from that firm. Yeandle predicted Pickering’s review will address the issue. He said his understanding was that social security secretary Alistair Darling was supportive but the Inland Revenue had issues with it.
Given the flop of stakeholder following publication of Association of British Insurers take-up figures on the new pension’s anniversary, Yeandle said of the prospect of increased compulsion that it would be perceived as another form of taxation but it could work if financial incentives were offered to employers. He said a survey by the EEF found that around a quarter of its members were in favour of compulsion but he suspected many in that percentage were firms already in possession of occupational schemes that wanted to level the playing field with their competitors.
The EEF is the representational voice of engineering and manufacturing in the UK and has a membership of close to 6,000 compani
Potential changes to accounting standards and increased pressure on companies to accelerate contributions could worsen FTSE 100 scheme funding by up to £100bn, according to Lane Clark and Peacock (LCP).
Smart Pension has taken on over 20,000 active members from the £20m Corpad Master Trust, following a strategic review by the ceding firm's trustees.
The Universities Superannuation Scheme (USS) allegedly obstructed a whistleblower as she tried to discover the true value of the deficit in its defined benefit (DB) section, according to reports.
The Cost Transparency Initiative (CTI) has launched a number of templates and guidance to help pension schemes deliver greater value for savers with enhanced disclosure of transaction cost information.