EU hedgie laws to hit pensions
EU PLANS to clamp down on the hedge fund industry could cost European pension funds €25bn (£21.2bn) a year, the industry trade body said yesterday.
The Alternative Investment Management Association (Aima) said plans to limit hedge funds’ leverage and to force managers to sign up to a costly disclosure regime will do “enormous” damage to their ability to generate returns. This would lower pensioners’ incomes sharply over the long term.
Pension funds have massively increased their investment in hedge funds in recent years, making the fight against the draft directive all the more urgent, Aima said.
It is thought that the European pension fund industry, which is worth €5 trillion, currently has nearly €1 trillion allocated to alternative investments like hedge funds.
Aima chief Andrew Baker said: “If they suffer lower returns as a result of the directive, it’s not only Europe’s pension funds but Europe’s pensioners of both today and tomorrow who will suffer.
“It is because of consequences like this that there needs to be a proper impact assessment conducted.”
Last month, the Treasury refused to carry out a study into the cost of the EU directive, in direct contrevention of its own guideliness which state it should carry out a so-called “impact assessment” into EU regulation that could hurt British business.