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PLSA outlines pension scheme Brexit needs

20 January 2017

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The Pensions and Lifetime Savings Association has outlined three things needed to ensure Brexit works well for pension schemes in the UK.

It said that from a pension scheme perspective, a successful outcome will include a robust economy, the right regulation, and a strong financial services sector.

PLSA said as good pensions depend on strong employer sponsors and an economic environment where employers and employees can make savings provision for the future, pension funds need a Brexit deal that minuses disruption to the economy.

It welcomed the intention of setting up a transitional regime because, it said, it would help avoid an economic cliff edge.

PLSA director of external affairs Graham Vidler, 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."

Discussing regulation, the organisation said if an equivalence regime after 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 exempt from any future EU regulation regarding a solvency-based regime.

"We welcome Theresa May's commitment to set up transitional arrangements to reduce any economic disruption due to leaving the Single Market" said Vidler.

"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."

PLSA also emphasised the importance of a strong financial services sector, saying to invest efficiently, pension funds benefit from access to the UK's successful financial services sector, it is vital that such companies can continue using their "passports" to do business in the EU Single Market.

First published 20.01.2017