EU REFORMS to pension schemes funding rules could increase occupational pension liabilities by at least £300bn, according to reports given to the Times newspaper.
The National Association of Pension Funds has written to the government and is said to have "pleaded" with them to ward off changes which are due to be introduced by 2007 and will force company pension schemes to hold sufficient assets at all times to pay out the benefits they have promised to scheme members, says the Times.
At present, UK pension rules allow company pension providers to take a longer-term view on the required assets – which unsurprisingly are fewer than European counterparts.
The UK rules allow company pension providers to take a long-term view of the promised benefits, allowing the schemes to hold fewer assets than their European counterparts. Complying with the Brussels version of funding requirements would cost up to £300bn.
The NAPF’s letter has been sent ahead of the Pensions Bill this week, adds the Times, which is intended to boost protection for company scheme members.
It is understood that the Bill, which was initially due in December, was delayed while DWP lawyers pored over the EU rules amid fears that they will over-rule the Government’s own plans to bolster protection for members of company pension schemes.
FRIENDS PROVIDENT is now a potential takeover target, reports this morning’s national newspapers, after one of the Sunday papers announced it had several suitors interested in buying the £3.3bn company.
The Scotsman says the Sunday Express reported yesterday it had been told by an investment banker he was working with a client drawing up plans to buy the insurance company.
Having built up its asset base since flotation three years ago, Friends Provident is now regarded as too big to be swallowed by all but the largest players, leaving only Zurich, Munich Re, Axa or Old Mutual as potential bidders.
HSBC, THE HIGH STREET BANK, is one of the few firms which has no plans to raise its interest rate, says the Scotsman, following last week’s base rate increase.
Most firms were quick off the mark to increase their rates as soon as the change was announced.But HSBC is expected to reveal it will freeze its mortgage rate at 4.74%, whereas most other borrowers will pay 6% elsewhere.
AND REAL ESTATE investment trusts look set to be launched by the government during next month’s Budget announcement, suggests the Daily Telegraph.
Experts hope the REITs will be based on the US model, which requires tax is not paid on income as long as 50-60% of revenue is distributed to shareholders, and then implemented by April 2005.
At this stage, however, there still appears to be significant emphasis by the property fund managers, on the use of commercial, rather than retail, property.IFAonline
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