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The estimate from the European Insurance and Occupational Pensions Authority (EIOPA) shows the impact of new capital requirements on final salary-linked pension schemes, where benefits are based on salary and duration of employment. The £450 billion estimate is in line with a worst-case scenario contained in figures the UK Pensions Regulator produced for the British government last year. The National Association of Pension Funds said the high price tag would have a highly damaging effect for the retirement prospects of millions of UK workers.
"Businesses trying to run final salary pensions could be faced with bigger pensions bills to plug an astonishing £450 billion funding gap", Joanne Segars, chief executive at the NAPF, said.
The new capital rules, known as Solvency II, were originally aimed at the insurance industry but the European regulator is proposing to adapt them for the pensions sector to improve standards of governance, risk management, valuation and calculation of minimum capital requirements.
Britain had the highest funding requirement out of the countries covered in the European watchdog's assessment, which were Belgium, Germany, Denmark, Ireland, the Netherlands, Norway and Sweden. Earlier on Tuesday, the European watchdog rejected calls for it to cut capital charges on insurance companies' infrastructure and private equity investments, which politicians are pushing as a way to boost long-term growth.