European Commission drops pension solvency requirements

The European Commission has dropped proposed solvency requirements from an overhauled pensions directive that will be put forward this autumn.

The Institutions for Occupational Retirement Provisions directive, which is aimed at improving the governance and transparency of pension schemes in the European Union (EU), will no longer include the issue of pension fund solvency.

Previous measures proposed under Solvency II rules, had been opposed by the UK government, due to concerns around significantly increased costs.

The Quantitative impact study on institutions for occupational retirement provision (Iorps): preliminary results for the European Commission, published by The Pensions Regulator and the European Insurance and Occupational Pensions Authority (EIOPA) in April 2013, showed the Europe-wide rules could increase UK DB pension deficits by around £150 billion.

Michael Barnier, the commissioner responsible for internal markets and services at the European Commission, said the directive will not cover the issue of the solvency of pension funds, and that there is a need to deepen knowledge before taking decisions on any European initiative on the solvency of pension funds.

“This proposal will not cover the issue of solvency rules for pension funds, which will, for the time being, remain an open issue,” he said.

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“In my view, the situation should be re-examined once we have more complete data.

“I emphasise that with regard to solvency rules, we must not lose sight of the need to guarantee in the longer term a level playing field between different providers of occupational pensions.”