László Andor, the European Commissioner for Employment, Social Affairs and Inclusion, has defended the controversial proposals for a Solvency II-style regime for pension funds, and insisted the Commission knows “the difference between insurance and pensions”.

Andor was speaking this morning at the National Association of Pension Funds' annual conference in Manchester. The European Commission's green paper on pensions, published last September, set out EC plans to investigate whether Solvency II, a directive aimed at insurers, could be used as a basis for pension schemes. Pension funds fear that a solvency regime applied to their portfolios would restrict their freedom to invest in risky assets, thereby impacting on their returns.