'No compromise' in EU pension fight

Pensions minister Steve Webb has vowed to fight potentially "catastrophic" EU plans to impose funding rules on British occupational pensions.

Mr Webb said there would be "no compromise" over the proposals, which could see many pension schemes being killed off if they come into force.

The European Insurance and Occupational Pensions Authority has been looking at rules to assess the solvency of pension funds, which providers say would ramp up their costs as more funding would need to be injected.

PricewaterhouseCoopers has previously estimated that the changes could cost businesses in this country up to £500 billion and the additional costs would ultimately be borne by individual savers, who would see less generous pensions.

The Solvency II rules to "harmonise" schemes would affect all private sector companies offering defined benefit (DB) schemes in Britain, representing around half of the private pension assets in this country, with liabilities of around £1,200 billion, the Government said.

Mr Webb, who has been holding talks with politicians and pension experts in the Netherlands and Denmark, said that despite the European Commission extending its timetable on the issue, the prolonged uncertainty means that schemes are becoming increasingly unsure about how they should be investing.

He said: "There will be no compromise on Solvency II. It is unbelievable the Commission is pressing ahead with these pointless proposals which would cost UK employers with final salary schemes hundreds of billions of pounds and lead to DB scheme closures. We will not let up until we make the Commission see sense.

"We expect them to publish a comprehensive impact assessment to clearly expose the catastrophic effect these rules would have on British pension schemes. It is horrifying these plans have got so far without this."

A landmark overhaul of workplace pensions is set to begin this autumn, when up to 10 million people are automatically placed into schemes, starting with larger companies. The move, alongside the introduction of a single tier state pension, aims to tackle the pension savings crisis amid concerns that the ageing population is failing to put enough cash aside.

Mr Webb said: "While Brussels is fiddling, Britain is putting reforms in place to keep our pension system sustainable in the future. We need to work together across Europe to tackle the real pension challenges we all face."