THE TREASURY has written to banks to reassure them that it will go to battle with the EU over new pensions regulation that it says would make saving for retirement much more expensive.
In a private letter sent to lenders and seen by City A.M., the Treasury’s financial secretary Mark Hoban expresses “serious concerns” about the way the EU is going about regulating pensions.
At issue is a botched draft of pension fund regulation by a new European regulator, the European Insurance and Occupational Pensions Authority (EIOPA), which has used insurance regulations as a template for writing its advice on pensions regulations, something Hoban says is inappropriate.
“I have serious concerns that harmonising occupational pension scheme capital rules with Solvency II carries a strong risk of locking capital in pension schemes, reducing investment in growth and significantly,” Hoban tells banks in his letter.
Implementing EIOPA’s recommendation would require pension funds to hold capital in reserve in a similar way to insurers, despite EU commissioner Michel Barnier saying that this is not the aim of the regulatory overhaul. Firms argue the rules would create a black hole worth billions of pounds in otherwise adequate pension funds.
“I am very keen for my officials to work closely with the British Bankers’ Association on this,” Hoban says, referring to UK banks’ trade body.