Spain to clarify EU directive position next week

EU- Speculation about attempts by the Spanish EU presidency to introduce quantitative investment restrictions and solvency tests into the pensions directive will disappear next week when it publishes a formal presidential text laying out its position on both issues.

The presidency caused uproar in February when it emerged it was trying to introduce quantitative investment restrictions- via the so-called ‘prudent man plus’ principle- into the pensions directive.

Last year the European parliament endorsed the prudent man approach and modification by introducing restrictions has been met with stiff opposition by the UK, Netherlands and Scandinavian countries.

To date the ‘prudent man plus’ principle has been built around responses to the questionnaire sent out last year by the Belgian presidency. There is no formal definition of the concept, instead a raft of interpretations ranging from virtually nothing on top of prudent man to it being strict quantitative restrictions.

The Spanish presidency will distribute the document next week to the working groups thereby outlining its exact approach to investment rules and to funding. Although the documents is not a formal Commission text, the Spanish presidency has consulted them on it.

With regards funding, the Spanish caused another wave of anxiety last month by proposing the introduction of a solvency test for pension funds which would lead to the mandatory injection of billions of euros into occupational schemes.

The UK government will oppose the proposal as it would force companies with deficits shown up by the new accounting standard FRS17 to cover them immediately.

Delegations to the pensions working group met yesterday to discuss the less controversial elements of the directive. When they next convene on April 26th, the prudent man plus and solvency issues will be discussed.

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