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NAPF chair criticises Brussels for 'working for the few, not the many'

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The chair of the UK National Association of Pension Funds (NAPF) has criticised the regulatory bodies of the European Union, accusing them of having the wrong priorities.

The lobby group’s chair, Ruston Smith, who took up his position in October last year, said a number of propositions out of Brussels and Frankfurt continued to be a source of real concern for the organisation.

He said the NAPF, alongside the asset management industry and the UK government, would continue their fight against the controversial financial transaction tax (FTT), whilst conceding Brussels seemed determined to push ahead.

This comes after the EU11, the name given to the 11 member states pushing for the introduction of the FTT, ramped up their attempts for implementation. 

“When will the EU learn to think longer term, and in the interest of the majority, and not the minority,” Smith said to delegates at the organisation’s annual Investment Conference in Edinburgh.

Smith also said the NAPF remained concerned over the numerous European Insurance and Occupational Pensions Authority (EIOPA) consultations on solvency requirements for pension schemes expected this year.

However, he claimed victory for the NAPF over the delayed introduction of these requirements.

“We are also concerned about the risk evaluation for pensions, and a mandatory, EU-wide, two-page benefit statement for members,” he said, referring to the level of prescription seen in the latest version of the European Commission’s IORP II Directive.

“The European Commission keeps coming up with ideas that fail to address the real issues,” he said.

Smith also argued that the increase in de-risking seen from UK defined benefit schemes was increasing demand for long-duration index-linked government bonds.

Over the last five years, he pointed out, UK schemes have increased fixed income allocations from roughly 20% of portfolios to approximately 45%, despite low yields.

“We need governments to issue more long-term index-linked debt,” he said. ”The demand is there, and it needs to be matched in supply.”

The UK is to auction a 38-year, index-linked Gilt towards the end of this month.

Smith also said, with an increasing number of schemes uprating pensions by the consumer prices index (CPI), the lobby group had entered discussions with the government and the Debt Management Office (DMO) over CPI-linked UK Gilts.

Discussion over the concept of CPI-linked bonds has been ongoing for some time.

However, speaking at an NAPF event in November, DMO chief executive Robert Stheeman said, while it would never rule out CPI-linked issuance, demand from pension funds was still “too sticky” for it to be cost effective for the UK government.

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