UK - The new pensions regulator must be backed by a framework which stipulates its basic principles, a leading fund manager warns.
State Street Global Advisors group chief investment officer Alan Brown pointed out that funds frequently operated “under influences which arose as unintended consequences of regulation”.
And he warned that the government’s plans for a new regulator could be undermined if basic concepts were ignored.
Brown said: “Pension systems need tax incentives to work. Tax rules should not be so tight that they get in the way of a pension fund building up a decent level of surplus as protection against the inevitable rainy day.”
Brown said the government should avoid trying to build a system guaranteed to be free from failure as the cost would be too high. But he said key points needed to be understood.
He added: “Solvency and funding ratio rules need to take into account the long-term nature of pension liabilities, and should not be destabilising to firms in the short-term. There should be a symmetry of response to deficits and surpluses.
“The accounting rules should not be driving the risk posture and investment decisions of pension funds.”
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MPs failed to place legislation into the Financial Guidance and Claims bill that would have made pension guidance default, which Just Group director Stephen Lowe said left a "bitter taste".
Aegon has called for the government to double the tax exemption on employer-arranged pension advice, up from £500 to £1,000.
Institutional investor confidence in Europe rose by 8.9 points in April with each region showing growing appetite for risk, according to State Street Global Exchange.