Deregulation unlikely, NAPF seminar told
UK - Minimising regulatory requirements for pension funds would be a good thing to do but it is unlikely to happen, delegates at a National Association of Pension Fund (NAPF) seminar agreed.
Introduction of principles-based regulation was one of the key suggestions made by the external reviewers of pension regulation.
"The outcome should be prescribed, not how to get there," said Chris Lewin, former head of Unilever UK pensions.
Lewin and Ed Sweeney from the Amicus trade union were appointed by the Department for Works and Pensions last year to conduct deregulatory review.
Delegates from pension funds and companies at the NAPF seminar on the outcome of this review characterised it as "courageous" and "noble".
However, the majority of those present agreed olitical will and a consensus for changes were lacking.
NAPF chief executive Joanne Segars noted the call for principles-based regulation had been made more than once before.
"We do seem to lack a realisation that it does not work as it is," said Robin Ellison, head of strategic development, pensions at legal adviser Pinsent Mason and former chairman of the NAPF.
"Regulation has become unmanageable. It would not kill us to sit down and think what kind of regulation we really need - one with less than 8,500 pages. Deregulation is not he answer to the problem but at the moment a major contribution to the solution," he added.
He called for a "holistic view" to be taken on the issue and noted until 1997 less than 30 pages of pension regulation were enough.
"It was not a perfect system. There were flaws but to all intents and purposes most people got most of their pension most of the time," continued Ellison.
"Current regulation is punishing the many for the transgressions of the few," suggested Jane Kola, pensions solicitor at Wragge & Co.
She highlighted section 75 of the Pensions Law, which was aimed at preventing wind-up of schemes without member protection.
"There is not a problem with it but this also applies to cases where several companies want to put together their pension fund into one scheme. This counts as partial wind-up as well," she pointed out.
Stephen Yeo, senior consultant at Watson Wyatt, said the report on the deregulatory review offered a "tree of cherries" for ministers and so it would be less effective as "ministers will be cherry picking".
The review also recommended facilitating the creation of risk-sharing schemes, allowing surpluses in a fund to go back to the sponsor and making 'debt on employer' regulations where a member leaves a scheme "less draconic".
Reviewers could not agree on whether to removed compulsory indexation for pension benefits.
But Ian Farr, chairman of the Association of Consulting Actuaries, suggested the UK should implement conditional indexation based on scheme funding modelled on changes recently introduced in the Netherlands.