Patrick Burke, who was elected chair of the lobbying organisation last November, also told delegates at the National Association of Pension Funds (NAPF) Investment Conference in Edinburgh that UK pension schemes should not underestimate the strength of the pro-Solvency II lobby in continental Europe. He said that in future there will be increased emphasis from Europe on harmonising the financial system across the EU.
"The scope of financial services legislation will creep toward occupational pensions in an unrelenting fashion, despite the social and labour laws," he said. "We are more likely to become regulated by financial services legislation." Burke said that while the EFRP had let it be known that Solvency II was inappropriate for occupational pensions, he did not believe the end of the debate had come and gone.
He urged the UK not to underestimate the interest in Solvency II simply because no strong lobbying group in favour of it existed in the UK, as there were prominent groups in both Brussels and other continental countries. He added that equating occupational pensions to insurance schemes – as both offered a benefit to members – posed risks to the financial market.
He highlighted the impact of a loss of capital if risk buffers needed to be established. "It also would impact negatively on the systemic risk to have those €4trn of assets," he said, referring to total assets represented by the EFRP. "Moving in the same direction as the insurance industry actually brings more systemic risk to the financial sector than the regulation of those on a like-for-like basis."
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