A European Commission Green Paper - due for release next week - is set to reopen the issue of solvency standards in pension schemes.
A draft copy of the 17-page document – seen by PP – calls for an “adequate, sustainable and safe” European pensions system.
It also refers to the issues of solvency funding and pensions protection repeatedly – and reopens the debate on whether or not schemes will be required to adopt an adjusted version of Solvency II, the standard that will be required of insurers from 2012, which has been going on for the last two years.
It says: “With a view to maintaining consistency with insurance regulation, the Solvency II approach could be a good starting point, subject to key adjustment to take account of the nature and duration of the pension promise.
“One important point to address, for example, is the variety in the interest rates that pension funds use to discount their liabilities.”
It adds: “[There is] a need to revisit the regulation of funded pension schemes to ensure they are efficient and remain safe in the wake of major financial crises while ensuring regulation is proportionate and does not push employers into insolvency or abandoning pension schemes.”
The Green Paper also recommends a reassessment of the Institutions for Occupational Retirement Provision directive – questioning whether current EU regulations can cope with the shift towards defined contribution provision.
And it discusses the possibility of an EU-wide private pension regulatory regime to “realise the advantages of a single market without affecting national structures of pension systems”.
A source told PP: “The pensions universe needs to be prepared for a fight. The indication from Brussels is that the Commission is looking at appropriate regulation for defined benefit schemes through this paper and the IORP directive.”
These comments come as Towers Watson senior consultants Mark Dowsey and Dave Roberts said, in an article for today's edition of PP (Brussels to the rescue?, PP, June 17), it was clear there was considerable appetite for change in Brussels – and noted there were “significant threats” for schemes.
