Jeremy Woolfe wonders whether the pension industry's growing hostility to Solvency II might have knocked the European Commission off balance.

Could Brussels be on the retreat? The subject concerns the forcing of pension funds to transfer assets from equities into bonds, as threatened if Brussels applies Solvency II rules for insurance to pension funds. At a recent presentation by Dutch asset manager Algemene Pensioen Groep (APG), a bitter attack by APG chief executive Dick Sluimers on Solvency II left the senior European Commission official present somewhat short on words.

Olivier Guersent, head of cabinet to Commissioner Michel Barnier, came up with a reaction that went little further than to express the need to keep rules fair between insurance and pension funds. He appeared to be pensive. This is notable - because of Guersent's elevated position in the Commission hierarchy and because it followed the speakers' emphasis on the EU's current campaign to oppose short-termism in investments in European industry.

Sluimers had certainly expressed his thoughts with a resigned sourness. "If you want to do it, do it," he said, his words reeking with irony. "But don't then complain when you lose long-term equity investment. If you regulate pensions companies in the same way as insurance companies, you'll find that pension firms will become the same as insurers. A lot of rules and regulations often achieve the opposite of what was originally intended."

Over 2010, more than half of Dutch pension investment assets, out of €800bn, were invested in Europe, Sluimers told a high-level gathering, held in a restored, 1897 palace set in a Versailles-type landscape to the east of Brussels. Around 45% of assets were in fixed income securities, such as government debt and company bonds - the rest was in equities, real estate, commodities and hedge funds. Under Solvency II rules as they stand, European pension schemes would have to sell off equities and convert the money into bonds, according to Sluimers.

His position may have been expressed more poignantly than most, but it is not entirety new. For instance, Philip Neyt, chairman of the Belgian Association of Pensions Institutions, has also warned that damage to the European economy could follow withdrawal from company investments by pension investors. Similar to Sluimers, he has described bonds as "short-term instruments" that are "exposed to the risk of inflation".

Attendees at the APG presentation tended to be guarded in their reaction to Sluimers's views. They were assembled in small groups in an idyllic setting. Above was an elaborate pergola. They looked out on to an avenue of formal gardens behind Tervuren town's Palace of the Colonies. However, their mood was predominately cautious.
Lobbies are all trying to form a position to any impending rules changes, and big organisations "don't want to reveal their own positions", explained a senior executive in another pensions firm. "Whatever the case," he added, "the European Commission's position does seem to have been thrown out of kilter."