EUROPE - Controversial European Union proposals which would limit how much pension funds could invest in high-risk assets are expected to fail.
Plans put forward by Spain - which holds the six-month EU rotating presidency - would cap the amount pension funds could invest in unlisted investments such as hedge funds, private equity, property and derivatives.
But a leading investment consultancy argued that this was a domestic Spanish issue being played out on the European stage and that the plan was bound to fail.
It pointed out that Spain had recently liberalised its pension system to look more like the British model. But this concerned unions who were worried that employers would make poor investments and lose money for employees.
The consultancy added: “The Spanish government is trying to get this draft passed through the EU so it can turn round and say to the Spanish people that it is trying to get this regulation passed but its hands are tied. It fully realises that it will fail, but it can then blame Europe.”
Sacker & Partners head of investment unit Jonathan Berman called it “bizarre” that the UK with its well-established funded private pension provision should be regulated by European countries where most states are in a less fortunate position.
He added: “Here we are with years of experience and vast sums under management in private pensions, regulated by trust law and the Pensions Act. And yet here are other countries with very little private funded pension schemes looking to bring in relatively cautious regulations.”
Eversheds head of national pensions Robin Ellison predicted that the plans are likely to be vetoed by the British and Dutch governments.
He said: “It may be that if the Germans, Spanish and French push this too hard, which they might, the others, certainly the British and Dutch, will veto it. The UK would prefer to see this sink as it is worse than we have at the moment.”
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