In his closing remarks at a recent public hearing on the revised Directive on Institutions for Occupational Retirement Provision (IORP) in Brussels, Faull warned that the past "could not be ignored" for defined benefit (DB) pension schemes. "Pension promises have been delivered in a manner that, for different reasons, has undervalued the real cost of the pension promise", he said. "If we were to apply more rigorous rules to the back book of the pension funds, this would most likely be financially unsustainable."
Faull said a solution to this problem had to be found before implementing any risk-based solvency rules for IORPs. He also pointed out that many companies have moved away from DB plans towards defined contribution (DC) schemes. "Undertakings have clearly realised they can no longer afford defined pension promises, as the returns on investments go down and people live longer, which of course is a very positive development, but which unfortunately results in higher liabilities and thus higher costs for occupational pension funds and rising costs for health services", he said.
Press release
© IPE International Publishers Ltd.
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article