BP pension head proposes cross-border tax clawback
EUROPE – Agreement on cross-border tax solutions for mobile workers’ pensions may not be as difficult as expected if the political will is there to look at novel solutions, according to Gary Hibbard, head of international pensions and benefits at petroleum multinational BP.
Speaking at the European Pensions conference in London today (March 29), Hibbard proposed a solution to cross-border movement involving member states clawing back any tax they feared would be lost by an expatriate working retiring overseas.
“ When a person moves cross-border why doesn’t the member state where contributions were being paid take a slice of the accrued benefits to cover the eventual loss.”
Hibbard says the member state where the worker settled could then take this into account if it any tax on remaining contributions had to be paid.
“ This does not have to cause the individual a great deal of problems if the political will is there.
Hibbard also expressed his surprise that pension fund surplus ownership had been omitted as an issue from the European directive, arguing that it could sound the death knell for defined benefit (DB) plans if companies are not able to use such surpluses to their advantage.
“ Companies will take the pensions risk on behalf of their employees, but only if they gain from it. If companies look at defined benefit plans and they can see no gain then the result is that the shareholders are likely to call for their closure.”