The European Commission (EC) is rushing through harmful plans that could ultimately reduce annuity rates for millions of UK adults, pension experts have warned. Under the new proposals for final salary pensions, UK pension funds would be saddled with an additional £300 billion of costs as they are forced to increase their reserves in order to become more resilient to economic fluctuations.The National Association of Pension Funds (NAPF) has claimed that the EC is not giving the pension industry adequate time to assess the impact of the so-called Solvency II proposals, with funds only given six weeks to run the rule over the regulations.As companies are lumbered with more costs, experts warn that they will be forced to close their final salary pension schemes and pass on the costs to people applying for an annuity.Ros Altmann, director general of Saga and former government advisor on pensions, claimed the regulations could result in pension savings being slashed by a fifth."Insurers will have to hold more gilts, which means that the interest rate on their assets will fall again, which means they will pay out even lower annuity income for each pension fund," she said."As gilt interest rates are lower than the interest rates on other bonds, annuity companies will have to cut the amount of pension they pay out to new retirees."
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