Hitchen adds voice to Solvency II criticism

15 October 2007

Chris Hitchen, chairman of the National Association of Pension Funds (NAPF) and chief executive of Railpen Investments, has become the latest critic of the Solvency II regime. He told a conference today that applying it to pension funds would amount to “killing the goose”.

Adding to earlier criticism from pension professionals towards applying the framework to pension funds, Hitchen argued funds would be exposed to much higher funding levels than necessary under Solvency II.

“Solvency II may end up being applied – if we’re not careful – to institutions of retirement provision; that would mean rather high solvency margins and rather high levels of funding will be required within schemes; we would argue rather higher than you should be asked to put in,” he said.

Speaking at today’s Punter Southall London Pensions Conference, Hitchen added: “Why actually kill the goose [that lays golden eggs]?”

He said European developments, in particular Solvency II, were a clear future issue for the NAPF.

Last month, Jaap Maassen, chairman of the European Federation for Retirement Provision (EFRP) and another critic of the framework, told delegates at the ABP conference that Solvency II, when applied to pension funds, was “a devil in disguise”.

Maassen also argued that implementation would be a serious threat to affordability if applied mechanically to institutions offering occupational retirement provision (IORPs).

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