Pension funds across Europe are worried that the European Union’s proposed new pensions directive is flawed and is being rushed through at breakneck speed.

The European Insurance and Occupational Pensions Authority (EIOPA), a pan-European regulator, earlier this week finished a six-week technical consultation into the European Commission’s proposed adoption of a Solvency II-type regime for final salary pensions.

“It is astonishing that the industry has been given only six weeks to assess very complex and technical issues, which will help determine the future of pension provision in the UK,” said Darren Philp, policy director of the National Association of Pension Funds (NAPF), a U.K. body which represents 1,200 pension schemes with collective assets of around $800 billion.

“Solvency II-type proposals could have extremely damaging consequences for our pensions and the wider economy. They would hit businesses running final salary pensions. We are concerned that the quality of policymaking is being driven by the political timetable, rather than by a commitment to getting it right. These are long-term issues and the European Commission should take the time to address them properly, rather than rushing them through.”

The insurance industry is gearing up to adopt new capital adequacy rules, called Solvency II, from 2014 aimed at reducing the risk of insolvency, but many pension funds are fearful that the regulations may be used as a template by the European Commission in its plans for cutting down risk in occupational pension funds.

Pension funds are big institutional investors and critics of the proposed European Union reforms say the remaining defined benefit pension funds across Europe could be forced to close as they will become too expensive to maintain, paving the way for severe systemic consequences.

“To apply Solvency II to pension funds is just not the same thing,” one London-based buy-side executive told Markets Media last month. “Forcing pension funds to go into a Solvency II world would immediately impact solvency issues for a large number of pension funds.”

Under the planned proposals, known as the IORP directive, the European Commission is looking to force pension funds to avoid risky investments and to hold larger cash buffers to guard against market volatility, while increasing cross-border competition and tightening supervision.

“The IORP directive revision will not have the outcomes desired,” said the European Federation for Retirement Provision (EFRP), an EU-wide pension fund lobby group, in its response to EIOPA’s recent consultation. “It contains the risk doing the opposite, namely reduce the adequacy of pension provision, which is of concern since recent pension reforms have mostly focused on preserving the long-term sustainability of systems rather than pension adequacy.”

A main bone of contention revolves around the holistic balance sheet approach, which EIOPA introduced in February as a way of assessing scheme funding which would take into account sponsor support and contingent assets as well as financial assets. The value of liabilities would include a capital buffer as well as the value of benefits.

“A large part of the consultation document seems to have been copied and pasted from the Solvency II directive despite the European Commission’s promises that the IORP revision would not be a copy and paste exercise,” the EFRP added.

“Some of the unique characteristics of IORPs are taken into account in the holistic balance sheet approach; yet, the proposed holistic balance sheet model will be an unworkable tool for IORP supervision due to the huge complexity and subjectivity of the chosen assumptions. Other models for IORP supervision should also be taken into consideration.”

Philp at the NAPF added: “Crucially, the consultation does not answer the key question of how the holistic balance sheet will be used in practice. Will it form a new funding regime, or will it simply be a disclosure item for trustees? The consultation also throws up completely new concepts, such as the question of how to value pension protection schemes and employer support for a pension scheme. These issues deserve their own [consultation] round.”

The NAPF calculates that the Solvency II-type rules could cost U.K. pension funds at least an extra £300 billion as they would be forced to dramatically increase the capital in their funds.

The IORP plans, which are likely to emerge as a legislative proposal at the end of this year, are most strongly opposed in the U.K., Netherlands, Belgium and Ireland, where final salary pension schemes are most prevalent.

In March, Michel Barnier, the EU’s financial services commissioner, said that Solvency II rules would not be “cut and pasted” from the insurance industry to the pensions sector.