GERMANY – Consultants have talked up the potential for a new investment vehicle in Germany after the country enacted tax laws allowing pension-asset pooling for the first time.

The government implemented the Alternative Investment Fund Managers (AIFM) Directive at the end of last year with the so-called Kapitalanlagegesetzbuch, or KAGB.

It has now drafted an amendment to several tax laws in order to comply with the new investment regulations.

Among the new vehicles created by the KAGB is the Investment-Kommanditgesellschaft, a limited partnership company offering a tax-transparent option to pool pension assets.

The government said the new tax laws would make pension-asset pooling "considerably more attractive" for multinational companies to pool the pension assets of their foreign subsidiaries domestically.

Before now, companies had to create asset pools in other countries such as Luxembourg, Ireland, the Netherlands and France to save taxes.

According to Ernst Schmandt, head of international consulting at Towers Watson Germany, companies currently use asset pools to increase scale, widen investment opportunities and create joint reporting and controlling.

He told IPE it would now be possible to pool the assets of a number of companies in a multi-employer asset pool, which in turn might "widen the number of users" of asset pools.

Schmandt added that the possibility of creating an asset pool might help employer representatives in Germany that are often included in decisions regarding occupational pensions to "lose their scepticism towards this vehicle".

However, Carl-Heinrich Kehr, principal for investment consulting at Mercer Germany, questioned whether foreign financial authorities would accept the new vehicle, and argued that it would lose its attractiveness if they did not.

He also questioned whether Germany would tax existing foreign asset pools created years ago, an issue the current draft on tax amendments does not address.

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