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Pension directive to boost capital markets – MEP

IRELAND - The benefits to be expected from pan-European pension funds were outlined by MEP Piia-Noora Kauppi speaking at the World Pension Association conference in Dublin today.

The economies of scale that the new directive on pan-European pension funds will allow pension funds would create benefits, she said. “Investors would see better returns,” she added.

There would be a positive effect on Europe’s capital markets, she pointed out. The amount to be invested in pension fund arrangements in Europe could come to 2.5 trillion euros, equivalent to 25% of European gross domestic product. “This is a huge amount of capital.”

The bigger multinational companies would certainly benefit from the proposed directive, she said. “They may stand to gain the most,” she said. But she also saw that smaller and medium sized businesses involved in cross-border activities could benefit.

“While the large companies are able to soak up the additional costs of running pension funds in different countries, this is a lot more difficult for smaller companies to do.”

She believed that companies with activities in just three or four countries could benefit, especially if they were operating on a regional basis. “If you can pool your assets in one investment portfolio and in one administration there are huge advantages.”

Finnish MEP Kauppi is a member of the European Parliament’s economic and monetary committee.

Thierry Laloux, head of the Belgian multinational practice at Mercer Human Resource Consulting in Brussels says he expects multinational companies could save up to 5%-10% directly as a result of the directive, along with further "significant" indirect savings.

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