Brussels is seeking to defuse a regulatory time-bomb facing Europe’s pensions as the retirement industry warns that EU derivatives rules scheduled for 2018 could cost savers billions.
The European Commission is preparing legislation to amend regulations that are seen as hurting pension funds, once they take effect in August 2018, by forcing them to put aside higher amounts of money to satisfy an EU law on derivatives trading.
The UK and the Netherlands are among countries that will suffer most if the European rules are not amended in time, according to EU data. But there is mounting concern that the planned amendments could become bogged down in political squabbles over clearing houses, threatening the timetable.
The problem centres on EU rules from 2012 for the derivatives market. That law, the European Market Infrastructure Regulation, sets minimal rules on the collateral that investors must have to back their trades.
Occupational pension funds have so far benefited from an exemption from the rules because of worries that they would struggle to have the ready supply of money or other highly liquid assets necessary to meet the minimum requirements. The exemption, though, is set to expire next year, requiring Brussels to seek a legal solution.