NEW: UK Govt says it’s “committed” to ensuring the insurance regime remains a “safe home” for people’s pensions. but also that UK insurers “remain internationally competitive”.
Govt was responding to a written question on the impact of Solvency2 reforms.https://t.co/FuwkoouYOR
— Josephine Cumbo (@JosephineCumbo) September 21, 2022
This is what Andrew Griffiths, Financial Secretary to the Treasury had to say
The Government is committed to ensuring that the insurance regime remains a safe home for people’s pensions. As well as that, UK insurers remain internationally competitive.
The Treasury’s consultation on the prudential regulatory regime for insurers known as Solvency II closed on 21 July 2022. It included questions seeking evidence of the impact reforms would have on policyholder protection and annuity prices as well as other objectives, including investment for growth. The Government will set out its assessment of this evidence when it publishes a response to the consultation later this calendar year.
I’ll watch with interest developments here, as the Treasury seems emboldened to rip-up the EU rulebook.
The financial services and markets bill (FSMB) put before parliament in July already sets out powers for regulators to amend Solvency II and MiFID II regulatory regimes. The changes would be incremental but welcomed by insurers as “collectively boosting the City’s competitiveness”.
I think this a bigger consumer issue that the fuss over “banker’s bonuses”. What is at stake here is the security of millions of pensions bought out by the large insurers, personally purchased annuities and even the security of less capitally onerous products such as personal pensions and the life platforms that hold most of our money in workplace pensions.
Backers of Brexit see reform of Solvency II as a test of government resolve to exploit Brexit ‘freedoms’ to unlock 95 billion pounds from capital buffers for investing in the economy.
But the Bank of England balks at releasing the higher amount of capital insurers are calling for, saying policyholders need protecting too.
Liz Truss may put her weight behind de-regulatory reforms from a report chaired by pro-Brexit lawmaker Iain Duncan Smith
Whether all this would have happened anyway is of no consequence, the arrival of the new broom appears to be accelerating the move towards an easement in solvency at a time when many DB schemes are in the zone to buy-out.
As I have written before, I am queasy about the keys to the car being handed over to insurers without the passengers (members) having a say.
IF we move to a more relaxed environment for insurers, then the arguments for not permitting Superfunds to compete for business fall away. The stated approach of Edi Truell’s Pension Superfund is to invest money for the long-term and to pass on the dividends of out-performance of benchmarks to pensioners by way of better pensions.
The quid per quo for the consumer from getting less protection has to be greater choice and the chance to participate in the upside of lower capital requirements – most particularly the superior long-term returns we can expect to be unlocked.
Can’t imagine that anything the current government does/will do will be to the benefit of the “man in the street”! Still, bankers will soon have eye-watering bonus again, so perhaps they can invest them in the insurers to keep our pensions afoat…