As the European Union’s financial crisis continues to dominate the political and economic landscape it is easy to forget it is still the ultimate source of legislation that will affect our industry. Brussels can seem a long way away from our day-to-day lives and with so much else on our plate with the current raft of pension reforms it would be easy to consider what goes on in the EU as a distant irritation that will never have
any significant effect on us.
Such an attitude would be dangerous. The EU consultative and legislative train may roll very slowly indeed, but once its course gets set, it is very hard to influence a change of direction.
We have already seen what the EU can do to our pension system – we are all going to have to contribute for perhaps another 12 months to repair the damage that the Test-Achats gender underwriting case has done to our annuity system
We have already seen what the EU can do to our pension system – we are all going to have to contribute for perhaps another 12 months to repair the damage that the Test-Achats gender underwriting case has done to our annuity system. Solvency II is also pushing up prices.
So the planned update of the Institutions for Occupational Retirement Provision directive should be treated with care – it could spell bad news for final salary schemes, as explained in greater detail by John Lappin in this issue. The CBI is certainly worried about it. It puts the potential extra cost at half a trillion pounds. Europe could even start to get involved with DC, according to some experts.
And while broadening the pool of knowledge and expertise applied to UK pensions is always welcomed – just look at the way a state-sponsored
competitor such as Nest has shaken up the DC world – prescriptive rules from a political entity representing entirely different systems to our own would not be welcome.
John Greenwood, editor
john.greenwood@centaur.co.uk