21 February 2003

IPE: Adverse reaction by UK to Pension Directive change

UK - Insurers and employees organisations have attacked proposed amendments to the current text of the draft directive of Institutions for Occupational Retirement Provision (IORP), voted through by MEPs at a meeting of the European Parliament’s Economics and Monetary Affairs Committee earlier this week.

The ABI (Association of British Insurers) is writing to members of the European Parliament calling on them to reject amendments to the occupational pensions directive that threaten the UK’s tax-free lump sum.

Stephen Sklaroff deputy director general said the ABI supported the principles of the directive but was worried about the specific amendment

“The Parliament’s new amendments endanger the tax free lump sum which is an important part of the UK pension system We are concerned that this change could seriously disadvantage savers at a time when we need to encourage people to save more for their retirement, not only in the UK but in all EU member state.

The Engineering Employers Federation (EEF), which represnts 6,000 companies in the UK, says that restricting the way in which lump sum payments can be used will reduce flexibility for both employers and employees.

EEF deputy director, David Yeandle, said: “ Despite some of the most damaging amendments being dropped, the vote presents a further significant threat to UK occupational pensions schemes which are already under great strain.”

The EEF, the Confederation of British Industry (CBI) and the National Association of Pension funds (NAPF), have written a joint letter to MEPs, urging them to support the common position.

The European Parliament will have a second reading of the directive on March 13.

© IPE International Publishers Ltd.