EUROPE – Pension fund pooling vehicles are set for take-off in Europe despite a lack of tax harmony, according to a pension fund pooling conference held in London today.
“The pooling of pensions across Europe is growing,” said Mercer worldwide partner and head of international consulting, Mark Sullivan.
According to conference chairman Willie Slattery: “This has been a slow and patient route, and the prize is very worthwhile having.
“The values of efficiencies gained through what we are doing should not be underestimated.” Slattery is managing director of State Street in Ireland.
Pooling has been the ‘next big thing’ for a long time but critics would point to a lack of deals announced. Yesterday Northern Trust said it had a $4bn pipeline of pension pooling business.
The conference highlighted the flexibility, pros and cons of various pension pooling vehicles offered by Ireland, Luxembourg and the UK.
These included Ireland’s Common Contractual Fund (CCF), Luxembourg’s Fonds Commun de Placement (FCP), and the UK’s Pension Fund Pooling Vehicle (PFPV).
However, a lack tax harmony across EU member states is still a major obstacle for pension pooling, said Sullivan. He said: “Tax will never be harmonised in the EU in my lifetime. The political and economic climates make it unworkable.”
According to State Street’s Slattery, significant progress has been made in removing barriers to pooling, including the taxation arena.
“But there is still lots of work to do,” he added.
Despite these complications, conference members were overwhelmingly supportive of pensions pooling.
According to Deloitte taxation services partner (Dublin), Deirdre Power, there is increasing interest in pension fund pooling.
“It’s a bit like the analogy of dipping your toe in the water,” she told IPE. Everyone is first waiting to see what will happen, and then everyone will hop onboard.