Minister for Pensions Steve Webb has today attacked the EU’s plans to use a Solvency II-style basis to measure pension liabilities as it could end up costing UK employers with final salary schemes around £150bn.

In a speech to the European Federation of Retirement Provision (EFRP) in Frankfurt, Webb stated that the increase in pension liabilities as a direct result of this, is likely to “harm businesses’ ability to invest, grow, and create jobs, and many schemes could be forced to close.

“We are urging Brussels not to pursue these dangerous, reckless plans. In Britain, we are making reforms to ensure our pension system is sustainable. In Europe, we should be working together to tackle real pension challenges, and find ways of better sharing the risk of providing pensions between the employer and employee,” he said.

Current trends show that over the next 20 years, the percentage of remaining schemes open to new members would be brought further down from 16 per cent to 5 per cent.

NAPF chief executive Joanne Segars commented: “Brussels is proposing a damaging solution to a problem that does not exist. Businesses struggling to keep jobs and investment going would instead have to divert huge amounts of money into their pension fund, completely unnecessarily.

“The UK has one of the strongest pension protection systems in Europe already and does not need this regulation. Instead the Commission should focus its activities on other aspects, like pensions governance and communications.”

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