Published on April 25th, 2016 | by frances0
The EU and Pensions
By Phil McEvoy, Prospect Pensions Officer
I am desperate to find good sources of impartial information on the EU debate, but I think I am fighting a losing battle. Everyone has a vested interest, but it does sometimes feel that those who have made up their mind feel compelled to present their views as fact. I am dubious of much of this as quite frankly nobody can predict the future or exactly what the reaction will be to the UK deciding to leave or remain in the EU. Consequently, I view anyone promising a golden era or warning of a cataclysm in either event as a charlatan.
For the purposes of full disclosure, I am undecided on how I will vote – I have considered voting leave in recent months, although right now I am probably in the remain camp. That said, enough could change between now and June that means I am likely to swing back and forth between sides. Although I am still keen to get as much fact-based information as possible, I suspect that, like many, I will end up voting on the basis of a few key principles.
For my part, I thought I would look into my area of work and see what influence the EU has had on the world of pensions. What I present below is based on my understanding and is intended to be impartial, as far as I consciously can be.
Many aspects of UK pensions legislation emanate from European law. These include:
- equality – this has been seen in the context of a requirement to equalise pension ages between men and women, and for equal access to pensions regardless of sex or part time working. Age discrimination legislation has, however, been used as a basis to remove some practices, such as the rule of 85 in the public service, which can offer terms that might have been seen as preferential to some
- change of employment – European directives have resulted in (limited) protections for pensions arrangements for those subject to a compulsory transfer of employment
- protection against insolvency – the existence of the Pension Protection Fund can be seen as having its roots in European law requiring the protection of employee rights on insolvency
- access to state benefits – the EU has operated a requirement whereby those moving between states can preserve state entitlements in each country and use social security payments in different states as a means to ensure qualification for (but not build up entitlement to) state pension in different states.
Much of this is likely to be seen as positive; although an argument could be made that there would be no reason that such measures would not have been adopted anyway. The world of pensions has changed immeasurably since the mid-70s. Many might claim that it has been made better or worse as a result of EU membership, but in truth I don’t see how any such assertions can be made. Unfortunately, we do not have a parallel universe generator that shows us where we might have been if we had stayed out.
Meanwhile, the greatest pressures on pensions arising from longevity and investment volatility are likely to have come to pass. Many employers like to blame increased regulation (which gives greater pension security) as a rationale for cutting generous workplace pensions, and so some will say that such regulation has been a bad thing.
Whilst consideration of the EU regulations is important, I suspect that this is secondary to issues on employer strength and the performance of investment markets. Both sides to the debate will claim that their position will provide a better platform for employer security and stable investments. These are key to ensuring good retirement provision. Unfortunately, nobody can really claim to have a crystal ball which guarantees one outcome will be better than the other.
What can be said is that UK citizens will undoubtedly carry on working hard and saving for their future, either as an independent country, or as part of a wider union of states. Prospect will continue to negotiate, lobby, campaign and fight for a better outcome for all our members.
And the charlatans will continue to prophesy doom/salad days to suit their own ends.