By Sarah Mortimer
LONDON, July 4 (Reuters) - The European Commission must scrap the idea of mandatory capital requirements for pension funds, Britain's pension industry said on Thursday, after a study found UK business could be hit with a 150 billion pound ($226 billion) bill if they were introduced.
Michel Barnier, European commissioner in charge of drafting business regulation, dropped a bid to make pension funds subject to the same capital rules as banks and insurers in May, but said he would propose alternative pension fund legislation in the autumn, fuelling speculation a similar plan might resurface.
The Commission has championed capital rules such as Solvency II for the insurance industry - which requires companies to hold enough funds to pay out for a once-in-200-years catastrophe - in a bid to prevent a repeat of the financial crisis.
In a study published on Thursday, the European pension watchdog said Solvency II-type rules would increase UK pension fund deficits by around 150 billion pounds.
The watchdog - the European Insurance and Occupational Pensions Authority (EIOPA) - said it still supported the idea of imposing extra capital requirements on pension schemes to safeguard current and future pension payouts to the retired.
However, Britain's pensions industry body said the costs showed Barnier's proposals should be abandoned for good.
'It is a relief that Commissioner Barnier has postponed these plans for now, but this report underlines the need for them to be scrapped completely. They must not be revived,' said James Walsh, lead EU policy advisor at the National Association of Pension Funds.
($1 = 0.6638 British pounds)
(Editing by Mark Potter) Keywords: EUROPE PENSIONS/BRITAIN
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