Brussels Legislation could cost pensioners up to 20% of their annual income.

Following meetings in Brussels this week, Vicky Ford, Conservative MEP for the East of England has warned pensioners that proposed EU rules could reduce their income by between 15-20%. 

Vicky took part in a questions and answers session with financial experts from across Europe.   She asked Europe's largest pension fund manager APG Asset Management how much it could cost pensions if new rules limit pensions funds to only being able to invest in traditional European stocks and shares and bonds.

APG told Vicky that the returns would be hit by 1 - 1.5% each year. To make up for such a reduction, either premiums for those still working would have to increase by 15-20%, or pensioners would see their income drop by a similar amount.

Around €230 billion of pensioners' money is invested by APG.  As well as traditional equity and bond markets, they now invest around a third of the money in what the EU is calling "Alternative Investments" this includes a wide range of different options from privately owned companies, to real estate, developing countries and hedge funds.  

Vicky explained

"The EU is introducing new rules that are intended to help protect investors from repeats of the market collapse that occurred during the credit crunch.  As with so many of the laws made in Brussels what started as a sensible intention now potentially goes much further.

Gordon Brown took the first 20% off pensioners' income when he raided the pension funds in 1997 - we can't afford to lose another chunk of our savings to poorly thought-out EU laws.  I will be doing my best to make sure that before these rules are finalised we dig into the detail and keep the costs for savers to more sensible levels. "

The full text of the Directive can be found here: 

http://ec.europa.eu/internal_market/investment/alternative_investments_en.htm#proposal

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