European Consultation on Pension Scheme Regulation ‘Inappropriate’ – FRC
The proposed quantitative requirements by the European Insurance and Occupational Pensions Authority’s (EIOPA), which are based on Solvency II, are not appropriate for all pension schemes.
This was the response of UK’s Financial Reporting Council to EIOPA’s draft advice to the European Commission (EC) for the review of the IORP Directive, the European legislation that governs the regulation of UK pension schemes.
The consultation includes the extent to which the regulatory framework for UK pension schemes should be similar to that for other financial institutions and products, in particular the Solvency II framework for insurers.
The FRC is particularly concerned about the large increase in the regulatory burden that Solvency II style regulation would impose. The FRC strongly urges EIOPA to carry out a thorough impact analysis before making any recommendations to the EC.
Commenting on the FRC’s response, Stephen Haddrill, Chief Executive of the FRC, said: “The regulatory and professional framework for UK pension funds promotes high quality provision supported by good corporate governance and advice.
“As proposed, the application of Solvency II requirements will make them far more expensive and risky for many employers leading to their early closure.”