Solvency for pensions only possible from 'position of zero' – PensionsEurope
European solvency requirements for the Continent’s IORPs could only be applied if all countries were starting from “a position of zero”, Joanne Segars, the chair of PensionsEurope has insisted.
Continuing the war of words over the introduction of solvency requirements for pension funds at a conference to mark the second anniversary of the European Commission’s White Paper on Pensions, Insurance Europe’s director general Michaela Koller argued that, while not every industry providing pension promises needed to be subject to the same regulatory framework, there remained a need for ‘same risk, same rules’.
The conference – which saw the internal market commissioner Michel Barnier indicate that, while he had postponed the publication of pillar I legislation detailing capital requirements, it remained an issue his successor would examine – also saw Segars continue the group’s fight against a solvency framework for the sector.
She said: “There’s a risk that the debate starts from the point that there are no rules that sit around the funding requirements and the solvency requirements of IORPs – and that, of course, isn’t the case.
“If I think about the UK pension system, if I talk to my colleagues in PensionsEurope, there is a huge amount of regulation and legislation applied in those countries around the governance and security of pension provisions within those countries.
“We mustn’t kid ourselves. We mustn’t think for one moment we are starting from a position of zero – and there is a risk that, in this debate, when we talk about Solvency II arrangements for insurance companies versus what might be in the communication tomorrow from commissioner Barnier for IORP, is that we are starting from a position of zero, which we absolutely are not.”
Segars, also the chief executive of the UK’s National Association of Pension Funds, the single largest occupational pensions market affected by the potential for capital requirements, said solvency rules would in fact undermine security.
“It could decrease the amount of security, decrease the amount of adequacy and decrease savings in pensions,” she said.