Solvency II: UK schemes to give evidence

At a fraught Work and Pensions Select Committee meeting last week, the impact of Solvency II was debated fiercely.

The committee pushed EC representatives for answers on whether the UK could be excluded from Solvency II if it would damage its pension system and economy.

But Ralf Gabriel, head of the unit for active ageing, pensions, healthcare and social services at the EC, said the £600bn estimated cost of the policy for UK pension schemes was “exaggerated” and claimed it was calculated without proper evidence.

The EC’s latest Quantitative Impact Study, designed to test the viability of the proposed holistic balance sheet, follows the recent backlash over the Europe-wide policy, with the UK pensions industry claiming it would be “the final nail in the coffin” for defined benefit schemes, as well has having severely detrimental macroeconomic consequences.

UK pension schemes including Tesco, BP, BT and the Universities Superannuation Scheme have privately expressed strong concerns about Solvency II to the NAPF, and will be active in the EC’s risk assessment process.

Vicki Pickering, a trustee of the BP Pension Scheme, attended the NAPF conference on Solvency II last week, and told PW Solvency II was high on the discussion agenda within the scheme.

James Walsh, senior policy adviser at the NAPF, said the organisation is “very happy” the NAPF will be a part of the testing process.

The Pensions Regulator is also expected to play a part in the process, but will provide a “number crunching” service rather than advising on the policy, according to Bill Galvin, its chief executive.

He said: “I have an open mind about the holistic balance sheet.”

And Bridget Micklem, head of insurance and savings at the Treasury, stressed the importance of a wider impact assessment of Solvency II on the economy, which she added the Treasury would be involved with.