Oil giant BP estimates that it could benefit by up to E40m annually if it was able to introduce pan-European pensions for its 40,000 multinational workforce.
Gary Hibbard, head of BP’s international pensions and benefits team in London, said that these savings could be achieved by economies of scale. BP has more than 100 pension funds worldwide with assets and liabilities of more than E20bn.
Speaking at a conference in London organised by Mercer Human Resource Consulting, Hibbard said his team had estimated that investment returns could be boosted by E20m by a combination of “prudent man, margins and pooling”.
Pooling assets would improve efficiency, he said and the prudent man principle – embodied in the European pensions directive – would improve asset liability modelling.
At the same time, annual savings of E20m could be achieved by removing surplus asset management. “What you are doing with a pan-European pension fund is constructing your own insurance operation.”
However, adds a caveat: “I have not factored in the existence of surpluses and deficits today.”
Hibbard says he expects pan-European pensions to become a reality with five years “if the legislation happens.”