UK consultation on directive
The British government has announced recently a two-month consultation period on implementing the EU occupational pensions and has published a consultation document.
The government says it has two years in which to implement the provisions of the directive following its official publication on 23 September.
The paper, which sets out the government’s views for implementation, is also aimed at seeking other views, which need to be submitted to the Department of Work & Pensions by 23 December next.
The paper concentrates on those parts of the directive that have not been included in earlier consultations and, in particular, may have implications for the UK’s position. The government says the directive supports its plans for reform of the UK pensions system.
The government adds that will build upon its Pensions Green Paper issued last December and the more recent ‘Working and saving for retirement. Action on occupational pensions’, published in June.
Among the issues, where the government are expressly looking for views are whether schemes with fewer than 100 members should be exempted from the requirements of the directive.
The government also seeks responses on the extent to which that the provision in the directive whereby the scheme provides biometric risks or guarantees levels of benefits or guarantees must have technical reserves and buffers, applies to UK schemes. However, it does not believe that the provision should have a significant impact on UK schemes.
On the issue of regular reporting on the liabilities of funds to members, the UK authorities wants suggestions on what should be included in the report, especially in between valuations.
On the investment side, the intention is to amend the law in order to review a statement of investment policy principles at least every three years. In relation to the prudent person rules in the directive, the majority of the recommendations mirror common law and pensions legislation un the UK, but there may be a need to legislate further for non-trust based occupational pension schemes.
There may be a need to amend current UK provisions regarding investment in the same group as the sponsoring undertaking. Regarding the limitations on borrowing by pension funds “for liquidity purposes and on a temporary basis”, the government says it proposes to allow such borrowing rather than have blanket ban.