Pensions Minister Steve Webb is vowing to fight potentially “catastrophic” European Union plans to impose funding rules on British occupational pensions.
The European Insurance and Occupational Pensions Authority (EIOPA) has been looking at rules to assess the solvency of pension funds, which providers say would ramp up their costs.
PricewaterhouseCoopers (PwC) has estimated the changes could cost businesses up to £500bn with the additional costs ultimately borne by savers, who would see less generous pensions.
The Solvency II rules to “harmonise” schemes would affect all private sector companies offering defined benefit schemes in Britain, representing around half of the private pension assets in this country, with liabilities of around £1,200bn, the Government said.
The proposed rules aim to improve retirement provision across the EU ensuring a level playing field between insurance firms and better pension protection. But the Government has argued there are huge differences between insurance products and pensions and Britain already has strong protection in place.
Mr Webb said despite the European Commission extending its timetable on the issue, the prolonged uncertainty means schemes are increasingly unsure about how they should be investing.
“There will be no compromise on Solvency II,” he said. “It is unbelievable the Commission is pressing ahead with these pointless proposals.”
A landmark overhaul of workplace pensions is set to begin this autumn, when up to 10 million people are automatically placed into schemes.