The need to post collateral that is a central feature of the model proposed in the Regulation will reduce pension schemes’ investment returns, further increasing the cost for corporate sponsors of providing for their employees’ pensions.  The proposed Regulation will also reduce pension schemes’ opportunities for risk mitigation while introducing new risks, including risks to the safety of scheme assets. 

In its Position Paper, the NAPF asks for pension schemes to be allowed access to the ‘non-financial counterparty’ exemption that is available to their corporate sponsors; a fairer division of the costs of central clearing, so that pension schemes are not subsidising more active and less credit-worthy participants; and adequate arrangements to ensure the safety of pension scheme assets put up as collateral.

Download document