EUROPE - Luxemburg and Ireland have “an edge” with double taxation treaties, the legislation for pensions investment pooling vehicles, according to a leading pension consultant.
Peter Scherkamp, who used head the Siemens pension trust and now runs his own firm, told IPE: “If you mean a vehicle which comprises the liability side and asset side, I think we are pretty far away.”
He said that a lot of ‘homework’ would be needed to achieve the idea of a pan-European pension fund as a common promise to all workers.
“If you mean something like pooling, we are pretty close,” he argued, adding: “There are good opportunities and possibilities to pool the assets from different European countries and several companies are doing this more or less efficiently.”
The ‘big trick’ for companies was to be tax efficient, with several companies already having conducted studies on the subject. “I believe Luxemburg and Ireland have an edge with double taxation treaties,” he said.
Small companies were generally more flexible about adapting in tax terms. “Pooling assets is not a big trick but doing it effectively and tax-effectively is a challenge still.”
Last year, Ireland launched a tax transparent vehicle, CCF or common contractual fund, designed to lure the pension business of multinationals away from Luxembourg’s FCP, fond commun de placement.
Both vehicles aim at catering for multinationals’ pension plans.
CCF promoters say that by pooling pension fund asset through such tax transparent pension vehicles, multinationals that operate pension funds across different jurisdictions, save in investment management costs, custody audit and taxation.
Multinationals going for CCFs would not be subject to Irish tax, while an annual tax on the net asset value is imposed on FCP, widely accepted as tax transparent vehicles in continental Europe.
Another feature of the common contractual funds is their lack of corporate entity and legal personality.
Last month computer giant IBM said it was likely to become one of the first multinational companies to use a CCF.