NETHERLANDS - Large multinational companies have been loath to launch cross-border pension plans under the EU's Institutions for Occupational Retirement Provision (IORP) directive, according to a survey commissioned by pension provider Syntrus Achmea.
Only two of the 13 companies surveyed have concrete plans for setting up an IORP, according to pension consultant Jean-Louis d'Hooghe, who looked at multinationals such as Chevron, Ikea, General Electric and postal giant TNT.
Of the two adopters, one company is in the process of establishing an IORP for some of its local European pension plans, while the other is aiming to follow suit soon, d'Hooghe said.
He added that both companies wanted to use an existing local pension fund.
The consultant said 10 respondents to its survey said they preferred a single platform model - covering multiple territories and currencies, in addition to being multi-lingual - with economies of scale cited as the main reason for an IORP.
By contrast, two respondents preferred the local platform model, as this is "less disruptive to employees, offers local knowledge, is flexible and offers reduced concentration risk", d'Hooghe said.
He said three multinationals that were "quite interested" in the concept had considered implementing an IORP within the next 2-10 years.
D'Hooghe further found that all surveyed companies had global guidelines stipulating that new pension plans should be defined contribution schemes, and that existing defined benefit plans should at least be closed to new members.
Pension plans must also be competitive and in line with local market practice, and new providers, such as insurers and asset managers, must be chosen from a list of preferred providers, the consultant said.
Other guidelines prescribed the use of a limited number of investment funds or, instead, clearly differing investment options.
Defined contribution plans should be financed through a matching contribution between employers and employees.
According to d'Hooghe, only one multinational is pooling a small part of its international pension assets, whereas three companies have placed pension investments from different territories in a virtual asset pool with preferred asset managers.
Nine companies are using an international benefits tool on pension design and costs, provided by one of the major actuarial consultants.
The pension funds of the surveyed companies are managing €170bn of assets for 1.5m participants. Most schemes still have defined benefit arrangements.
Syntrus Achmea has developed a centrally consolidated model, as well as a local model for implementing an IORP.
It said it was already serving several cross-border initiatives, using the European Life and IORP Directives.