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Cross-Border Pension Plans

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Cross-Border Pension Plans in Europe Where Do We Go From Here? Anne Maher Chief Executive The Pensions Board Ireland 29 August 2006 Agenda Cross-Border Plans What is ... – PowerPoint PPT presentation

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Title: Cross-Border Pension Plans


1
  • Cross-Border Pension Plans
  • in Europe
  • Where Do We Go From Here?

Anne Maher Chief Executive The Pensions
Board Ireland 29 August 2006
2
Agenda
  • Cross-Border Plans
  • What is now possible?
  • How is this likely to develop?
  • Where will these plans locate?
  • Next steps

2
3
What is Now Possible
  • Legal Background
  • EU aim to achieve Single Market for pensions
  • EU Communication on The Elimination of tax
    obstacles to cross-border provision of
    occupational pensions (April 2001)
  • EU Directive 2003/41/EC on the activities and
    supervision of Institutions for Occupational
    Retirement Provision known as the Pensions
    Directive (September 2003)
  • The Pensions Directive to be implemented into
    Member State legislation by 23 September 2005

3
4
What is Now Possible
  • EU Pensions Directive Principles
  • Sets framework for pension scheme supervision
  • Effectively sets common minimum level of
    supervision
  • Moves towards freedom of investment for pension
    schemes
  • Facilitates cross-border pension schemes
  • Provides possible legal framework for Pan
    European pension schemes

4
5
What is Now Possible
  • Investment pooling cross-border - already
    possible and happening
  • Pooling of liabilities
  • Pooling of administration

5
6
Development of Cross-Border Business
  • Types of Cross-Border IORPs
  • Existing plans which relocate
  • New employer sponsored cross-border plans
  • New commercial cross-border arrangements

6
7
Development of Cross-Border Business
  • Who is Interested
  • Multinational Employers
  • For pooling or merging
  • Employers with Existing Pension Plans
  • For regulatory or financial advantage
  • Commercial IORPs Providers
  • Looking to sell pensions cross-border

7
8
Development of Cross-Border Business
  • Reasons to relocate
  • Multinational employer
  • Better governance/control
  • Single governance regime
  • Economies of scale/cost savings
  • Facilitate corporate change/culture
  • Accommodate mobile employees
  • Single employer/single country plan
  • Regulatory/supervisory regime?
  • Financial advantage?

8
9
Development of Cross-Border Business
  • Drivers
  • Commercial Beneficiaries
  • For-profit IORPs providers
  • Advisers to multinationals
  • Potential providers of cross-border management
    and administration services

9
10
Influence on Cross-Border Business
  • Choice of Location
  • Tax arrangements
  • Investment opportunities
  • Pension tradition/services available
  • Availability of tried and tested pension
    skills/resources
  • Regulatory/compliance structures and environment
  • Ability to accommodate countries outside EU

10
11
Impact on Cross-Border Business
  • Regulation
  • Balance between reasonable cost and member
    protection
  • Transparent/open environment
  • Reasonable level of investment freedom
  • Respected regime
  • No regulatory arbitrage

11
12
Impact on Cross-Border Business
  • Obstacles
  • Social and Labour Law
  • Tax
  • Defined Benefit Funding Standards
  • Pension Reform
  • Member State attitude
  • Inexperience
  • First mover disadvantage

12
13
Location of Cross-Border Business
  • Any Member State
  • Attraction of Luxembourg, Ireland, UK, Dutch
    pooling vehicles?

13
14
Ireland as Pensions Location
  • Tax arrangements
  • Irish law incorporates cross-border tax reliefs
  • Investment opportunities
  • Common Contractual Fund (CCF)
  • Pension tradition/services available
  • Ireland has long established private pension
    structure
  • Availability of tried and tested pension
    skills/resources
  • Investment, Actuarial, Accounting, Legal, Benefit
    consulting, Benefit administration, Compliance
    skills available in Ireland
  • Regulatory/compliance regime
  • Acceptable and balanced regulation by open and
    accessible regulators supervisors in Ireland
  • Ability to accommodate countries outside EU
  • Global services available in Ireland

14
15
Ireland as Pensions Location
  • Pan-European Pensions Task Force
  • Examining opportunities in international pensions
    area
  • Will facilitate initiatives/changes
  • Suite of asset pooling vehicles
  • Unit Trust (Fixed Income Investments)
  • Limited Partnership
  • UCITS CCF (Equities Investments)
  • Non-UCITS CCF (Alternative Investments)

15
16
Next Steps
  • Implementation of Directive by all EU Member
    States
  • Clarification of some Directive requirements
  • Protocol in operation between Member State
    pension supervisors
  • Consideration and decision on location by pension
    scheme sponsors and commercial providers

16
17
In Conclusion
  • Pensions Directive
  • Is first step in single market for pensions
  • Provides a framework for change
  • Investment/asset pooling is happening
  • Liability pooling and centralised administration
    are next steps
  • Full Pan-European Pension Funds
  • Will take time
  • But WILL come about

17
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