Brussels pensions move 'would cost firms billions'

Controversial new EU solvency rules threaten to create a fresh pensions crisis and load billions of pounds of extra costs on British businesses, a report to be published today will say.

The analysis, by the accountancy firm Deloitte, will warn that the average cost of imposing a proposed new Solvency II-style directive on a FTSE 100 pension scheme will be £2.5bn in terms of the extra liabilities they will incur.

The rules are being proposed by the European Insurance and Occupational Pensions Authority, which is currently consulting on applying the Solvency II-type framework to EU-based pension schemes and proposing changes to the funding of schemes and risk management processes.

The Deloitte survey, which covered large pension schemes and their sponsors, representing more than £100bn of liabilities, found that three-quarters believe the proposals will increase gross liabilities by between 20 per cent and 50 per cent.

For the average FTSE 100 company this would represent an increase of between £1bn to £2.5bn in liabilities.

The Solvency II regime on which the pensions rules will be based has been hugely controversial with the insurance industry. The insurance giant Prudential has threatened to quit the UK due to the changes being made.