UK - Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), has expressed concern at regulations that could see pension fund trustees jailed for up to two years, urging the government to suspend the new rules until all issues are addressed.
In a letter to pensions minister Steve Webb, she said many of the NAPF's members were concerned about the changes made to the pensions investment regulations, which came into force yesterday.
Segars argued that the risk of an unlimited fine or two years imprisonment if pension funds did not strictly adhere to the amendments - which mean occupational pension schemes in the UK will no longer be able to invest more than 5% in sponsoring companies - risks deterring new trustees.
She added that while pension schemes already restrict their direct investments in sponsoring companies to make it "virtually impossible" for them to rise above 5%, market movements and indirect holdings can lead to fluctuations.
"In such circumstances, the risk of breaching the limit is low, but there is nevertheless a risk, however small, that a pension scheme might exceed the limit without knowing it at the time," she said.
While Segars praised the Department for Work & Pensions (DWP) for the guidance it has already provided on the new rules, which were enacted to bring the UK into line with the Institutions for Occupational Retirement Provision Directive, she said it lacked details on the "frequently complex products and structures" in which pension funds invest.
The Pensions Regulator is currently working on a statement with the DWP that would detail its approach toward employer-related investment, but Segars did not believe this would be sufficient, as it could never be legally binding and would therefore not put trustees and scheme administrators at ease.
"I am therefore asking you to suspend the new regulations until these concerns are resolved," she wrote Webb.
"I would add that we do not accept that a high level directive like the IORP Directive removes member states' discretion to implement the limits on employer-related investment in a practicable way."