UK unlikely to see 'large-scale' changes to pensions law post-Brexit
The UK is unlikely to undertake a large-scale repeal of pensions law emanating from the EU in the wake of the nation’s historic vote to leave the Union, lawyers and the country’s pension association have predicted.
Responding to Thursday’s referendum, which saw 52% of the electorate back a departure from the EU, the Pensions and Lifetime Savings Association’s chief executive, Joanne Segars, said the ramifications would become clear in the coming weeks and months.
Segars, a former chair of PensionsEurope, said: “Much will depend on the precise nature of our future relationship with the EU, which may mean some aspects of UK pension provision continue to be influenced by the EU.”
The Dutch Pensions Federation has lamented the UK’s departure from the union, telling IPE it would “lose an ally on pensions matters”.
Segars added that some areas may need to see UK pensions law “disentangled” from EU directives and regulation.
If the UK were to break ties with the EU completely and forego an agreement to join the European Economic Area, it would likely enable it to sidestep the eventual transposition of the revised IORP Directive, of which IPE has seen the final draft, due to be published Monday (27 June).
Matthew Swynnerton, a pensions partner at law firm DLA Piper, stressed that a vote to leave the EU would not have an “immediate impact”.
He said: “Whilst significant areas of UK pensions legislation originate from the EU – such as scheme-specific funding requirements for defined benefit schemes and non-discrimination – because these provisions have been implemented into national law, they remain intact despite the outcome of the referendum.”
Scheme-specific funding requirements were introduced in the Pensions Act 2004, which established he Pensions Regulator (TPR) and the Pension Protection Fund and transposed into UK law the first IORP Directive of 2003.
Swynnerton said that, while future reform was possible, he believed “large-scale” reform were unlikely, as much of the legislation was meant to protect members.
A second law firm, Pinsent Masons, urged UK trustees to focus on the immediate impact of the referendum in the shape of market changes rather than the longer-term potential for regulatory change.
Alastair Meeks, pensions partner at the law firm, said: “As far as legislative and regulatory change is concerned, trustees need only adopt a watching brief until government policy becomes clear.
“The government would need time to decide what elements of EU law are worth retaining, and what can be overhauled.”
The point was reiterated by a TPR spokesman, who said: “Any future change to UK pensions legislation as a result of the referendum would be a matter for government.”
Meeks added: “Trustees shouldn’t mistake the interesting for the urgent.”
For her part, Segars pledged that the PLSA would continue to ensure the voice of pension funds was heard in the “uncertain times ahead”.
“It is essential that the UK government and policymakers in Brussels now act swiftly and decisively to manage current volatility and announce a clear plan to renegotiate our future relationship with the EU,” she said.
Jean-Claude Juncker, president of the European Commission, said in a statement that he expected the UK government to act on the referendum’s result swiftly.
“We now expect the UK government to give effect to this decision of the British people as soon as possible, however painful that process may be,” he said.
“Any delay would unnecessarily prolong uncertainty.”