The Pensions and Lifetime Savings Association today (Tuesday) underlined the three elements needed to ensure Brexit works well for pensions in the UK.
From a pension scheme perspective a successful outcome from the Brexit negotiations would include the following:
- A robust economy: as good pensions depend on strong employer sponsors and an economic environment where employers and employees are able to make savings provision for the future, pension funds need a Brexit deal which minimises disruption to the economy. We welcome the intention of setting up a transitional regime as this should help avoid an economic cliff-edge.
- The right regulation: if, as a result of setting up an equivalence regime, Brexit results in UK pension funds remaining subject to EU regulation, it is important that UK-only pension schemes, which do not operate on a cross-border basis, are exempted from any future EU regulation regarding a solvency-based regime.
- A strong financial services sector: to invest efficiently, pension funds benefit from access to the UK’s successful financial services sector. It is important that such companies are able to continue using their “passports” to do business in the EU Single Market.
Graham Vidler, director of external affairs, Pensions and Lifetime Savings Association, said:
“A successful Brexit matters to the 20 million workers, savers and pensioners served by our pension schemes. If the economy weakens, it will make it harder for sponsoring employers to keep DB schemes open and reduce the funds individuals can afford to put into DC pensions – but these risks can be reduced if the Government addresses the points we raise.
“We welcome Theresa May’s commitment to set up transitional arrangements to reduce any economic disruption due to leaving the Single Market. While it is not yet clear whether EU regulation, as a result of establishing equivalent rules for financial services, will encompass pension funds, we will be arguing strongly that EU rules on solvency requirements for DB pension funds should not apply to pension funds that only operate within the UK.”