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Special Report

ESG: The metrics jigsaw


UK support for EU pension reform

The UK pensions minister, John Denham, has strongly backed the Monti green paper, fuelling speculation that pensions reform could become a major theme of the UK’s forthcoming EU presidency.

Warmly welcoming the green paper, Denham said: The commission’s analysis of the pensions problem is very much in line with the government’s own thinking.”

In a speech to pension professionals in London last month, the minister strongly backed the British system of asset liability modelling and high eq-uity investments as a model for re-form.

“The solutions proposed by the commission can be seen as a solid endorsement of the freedoms enjoyed by the pensions industry in the UK,” he added.

While not explicitly criticising other member states, Denham re-iterated some commission criticisms.

“As the commission points out, re-lying wholly on unfunded pay-as-you-go schemes does not represent a viable long-term solution.

“We invest a high percentage of assets in equities whereas most of the other member states invest in other securities, mainly government bonds.

“A higher rate of return is enjoyed by equities over the long term, precisely what is needed for retirement savings.”

He also noted that the commission had canvassed a proposal to give authorised fund managers the freedom to offer services all over the EU.

Commenting on the speech, Bill Birmingham, manager of benefit services at the UK’s National Association of Pension Funds (NAPF) said: “Be-cause the UK takes over the EU Presidency from January, the minister is looking to see what role the UK as President can play in moving things forward.”

He continued: “The NAPF’s position is that we will do all in our power to assist DSS in pushing forward the response to the Monti Green paper.”

Denham also expressed support for the resolution of the issue of migrant workers’ pension rights, saying that he expected the commission to present a formal directive this autumn.”

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