“It is absolutely true that if the EU imposes Solvency II rules on UK pension schemes, it will be a disaster for UK companies and for pension scheme members. The Government must fight hard against these ludicrous rules being imposed retrospectively on UK employers by EU countries which have a very different pension system from our own.
“If UK employers are forced to fund their pension schemes on a Solvency basis, the closure of private sector schemes will be inevitable, and, even worse, many employers may be bankrupted by the additional costs, resulting in workers ending up with reduced pensions in the Pension Protection Fund – putting a huge strain on the PPF. Thus, ironically, an EU system that is supposed to ensure that European pensions are safer, could end up making UK pensions much riskier. A uniform policy for EU pensions will not work when imposed on our already mature pension system. Because the legacy of pension schemes in different countries is so different, one size definitely does not fit all.
“UK employers have already had to cope with the rising costs of pension provision resulting from Bank of England Quantitative Easing policies that have driven gilt yields down to such exceptionally low levels. Pension deficits and costs have soared, but Solvency II would make the problem even worse. Many of our pension schemes will not be able to cope with the costs involved.”