Editorial: So it’s official, the referendum will be held in June. The battle for yea or nay – and for political careers – has begun.
Boris Johnson has finally made up his mind over which team to join (the one David Cameron isn’t on), while David Cameron has deployed the Bank of England weapon, which he plans to use to fire economic stats around Brexit at those who are non-believers in the European Union.
For UK pension funds, not being in the European Union could be a weight off their shoulders, as the threat of the holistic balance sheet would disappear overnight, and the details of the revised Institutions for Occupational Retirement Provisions directive would become blissfully irrelevant.
On the other hand, the creation of cross-border schemes would complicate life significantly for those operating in Northern Ireland and the Republic of Ireland, where most such schemes currently exist, and the effect an exit would have on sponsor covenants would have to be considered.
Having roots in Switzerland, the In-Out debate is an interesting and somewhat familiar spectacle for me to watch. Switzerland is neither in the EU nor the European Economic Area but has numerous bilateral agreements with the EU, negotiated in who knows how many hours.
Pension funds in the alpine country are therefore only subject to Swiss regulation. But unsurprisingly, complaints of over-regulation still abound. A supervisory commission was established in 2012, which has been blamed for adding to a flood of regulation, while others say that demographic development means regulatory pension changes appear inevitable (both in the Swisscanto study 2015).
In a Swiss newspaper, regulation has been cited as one of the reasons why employers are closing pension funds to join multi-employer schemes.
It looks to me like some of the major trends affecting UK pension funds will continue whether the UK is in the EU or not: demographic change, increasing regulation and consolidation of schemes and mastertrusts are unlikely to go away any time soon, as are very low interest rates.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter@SandraCWKand the team @pensions_expert.
