The UK pensions minister, Steve Webb, has claimed that Solvency II measures in the revised IORP Directive will end any prospect of risk-sharing among UK companies, while the total cost to the local pensions industry could reach as high as £400 billion.
The UK pensions minister pointed out that it was currently illegal for companies in the UK to offer employees pension promises unless they were inflation protected. "We are currently looking at ways to encourage firms to offer what you might call 'defined benefit light' – where pensions are essentially like the old DB style, but with more flexibility for the firm – or 'defined contribution plus' – which aims at getting more money in but also looks at scheme quality, scale, charges and governance", he said.
"What we do not want is a shift from high-quality, final salary, index-linked pensions that are so expensive that firms won't want to provide them to a shift all the other way with minimalist DC and minimalist contributions." Webb went on to say that UK companies wanted risk-sharing but were "terrified" about Solvency II, and that Brussels would make those promises "very" expensive.
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