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The European Commission’s proposed IORP (Institutions for Occupational Retirement Provision) II Directive was designed to impose rules derived from the Solvency II regime for insurers on workplace pension schemes, many of which are underfunded.
Following pressure from politicians and the pension industry in several EU states, the Commission said last month the Directive, due in the autumn, would not include solvency rules for pension funds. However, it said the issue remained “open” and the situation “should be re-examined once we have more complete data”.
If the proposals were to be revisited, LCP has calculated the additional cash funding requirements imposed on UK companies would equate to 46 per cent of GDP, compared with 2 per cent for Germany and Ireland, the countries next worst hit, and 1 per cent for Belgium.
“The impact of Europe’s pension proposals would have been gargantuan for the UK when compared to other countries. These proposals would be crippling for the UK economy”, said Jonathan Camfield, partner at LCP.
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