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Commissioner Hill 'not opposed' to solvency rules for pensions

The European Commission is not opposed to the use of solvency rules when regulating pension funds, Jonathan Hill has said. 

Hill, commissioner for financial stability, told a reception hosted by industry group PensionsEurope that funds had to be “managed responsibly”.

“I do not oppose solvency rules,” he said.

Clearly aware of the years-old campaign by the occupational pension sector to oppose insurance-type rules on solvency matters, Hill appeared to speak tactfully but firmly.

“I know of your [pension funds’] concern over the HBS [holistic balance sheet] stress test,” he said, adding that he looked forward to the industry’s recommendations.

“I’ll listen very careful to your considerations.”

Hill has previously said there could be a need to “deepen the single rule book” for financial institutions, and included the potential rollout of further solvency requirements within those rules. 

The commissioner said the development of the Capital Markets Union (CMU) was one of the main issues now facing the financial sector.

“It could be of great potential benefit” to support a developing economy and job creation, he said.

He said the CMU was receiving encouragement from all sections, including the industry, and that pension funds were possibly one of the largest sources of investment, notably for infrastructure projects. 

The project, he noted, was relevant parts of the EU, including those with less developed capital markets.

The fact 40% of workers in the EU do not have occupational pensions brings into focus the development of personal pension schemes, he added.

Again, applying tact, he assured the audience of his belief in the importance of the occupational system.  

The European Insurance and Occupational Pensions Authority is due to issue a consultancy exercise on the subject on 1 July, and report on it around February next year.

A bystander at the reception noted that Hill made no mention of the term ‘29th regime’, suggesting that perhaps this was because it could cause misunderstanding.

The term was previously employed to denote the development of a new, European regime for private pensions, rather than the harmonisation of existing systems across all member states.

But Hill’s reference indicated that he was taking the subject seriously.

He has used the term on at least one previous occasion, but without elaboration.

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