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EU pensions proposals are rejected by the government

EU pensions proposals are rejected by the government

The Department of Works and Pensions has rejected EU proposals to set up a defined benefit pensions solvency regime.

The minister for pensions, Steve Webb, said he did not think that one European model would fit all the EU pension systems as there is a rich diversity of pension provision across the member states.

The European Commission launched its pensions consultation in the summer saying that there is now a massive strain on national retirement systems because of the ageing population and the economic crisis has added yet more pressure.

The National Association of Pension Funds believes that EU plans to ensure pension fund solvency would have undermined pension provision. One proposed solution to the pension’s problem was to mirror the system the EU adopted for the insurance industry. NAPF says this was not a workable solution because of the differences in the ways the two industries operate.

NAPF’s chief executive, Joanne Segars, pointed out that the pension system in the UK already has strong protection through the employer covenant, the Pensions Regulator and the Pension Protection Fund. She said that adding additional requirements could have the opposite effect of promoting adequate pension provisions and lead to defined-benefit schemes closing.

On the other hand, the Investment Management Association has claimed that a single European pensions market could bring significant benefits to freelance savers.

The Association made its statement in response to the European Commission green paper calling for the views of stakeholders on the best ways to create sustainable, stable pensions. The IMA did point out that, whilst it backs the single market idea, existing retirement funds should not be damaged if one were to be established.

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