EUROPE – Citigroup’s Global Transaction Services arm has created a pension pooling structure using an Irish common contractual fund vehicle for the Dutch pension fund clients of Legal & General Investment Management.
According to LGIM, just under £100m (€145.6m) has been invested so far. However, this is still a new structure and several more schemes are expected to invest over the coming months.
According to a spokesperson for LGIM, all the investors are Dutch pension schemes, which want to get exemption from US withholding tax and also want to use index tracking as their investment technique.
She could not state how many schemes have invested so far.
LGIM told IPE that Citigroup are acting as the administrator and custodian to the CCF.
According to a statement released today: “The Citigroup solution enables LGIM to distribute the CCF to a large number of European pension fund clients allowing clients to realise their full entitlements under existing double taxation treaties.”
CCFs are tax-transparent vehicles, similar to Luxembourg’s Fonds Commun de Placement (FCP), which enable pension funds to be taxed as segregated funds in spite of the fact that they are within a pooling vehicle.
According to LGIM managing director of corporate pensions Mike Craston, “We have worked closely with Citigroup to establish the structure which provides our clients with a cost-effective, pooled solution with the benefit of tax transparency.”
Meanwhile, Citigroup Global Transaction Services director Bernard Hanratty stated: “Leveraging a structure using the CCF allows LGIM to further enhance its leading index management service to European pension funds while marking an important initiative for Citigroup’s growing fund services business.”