Another study has indicated why the changes the European Commission envisages would be bad news for UK defined benefit pension schemes. This time it was the preliminary results of the Qualitative Impact Assessment, recently published by EIOPA (European Insurance and Occupational Pensions Authority) for the EC which showed the impact of proposed changes to the Institutions for Occupational Retirement Provisions Directive.
The study estimated that UK defined benefit (DB) schemes would have to put £450billion into schemes to maintain scheme funding levels. This could result in increases in members’ pension contributions or cuts in scheme benefits, or worse still scheme closures to new members, or closures to future accruals. It will also have wider economic implications for businesses as they will have to divert money into their schemes rather than invest in company growth, job creation and R+D.