EUROPE - European multinationals are evenly split as to whether the adoption of the pan-European pension directive will prompt them to review whether it is currently worth establishing a pan-European pension fund, according to a survey conducted amongst multinational peers in Europe by German giant BASF.
Presenting the findings of the survey to the International Pensions
Conference of the EFRP/NAPF in Barcelona yesterday, Withold Galinat, head of international employee benefits at BASF, showed that multinationals were divided 50/50 as whether they would now seek to introduce pan European pension plans on the back of the Directive.
The survey questioned 36 different multinationals, principally in the
industrial sector, regarding their intentions vis à vis the Directive, of
which 18 responded - split evenly at six apiece between multinationals from the UK, Holland/Belgium and Germany.
Those responding in the negative, Galinat said, were largely concerned that the lack of resolution in the tax sphere nullified the current potential for pan-European plans.
On average, multinationals ‘strongly agreed’‚ with the proposal that removal of tax barriers would be integral to the eventual success of the Directive (see below).
The majority of respondents also ‘strongly agreed’ with the suggestion that the Directive would only succeed if national regulators quickly reached agreement on future methods of mutual co-ordination.
On a sliding scale of one to five, Galinat asked the multinational peers to gauge how far the Directive would go in meeting some of the expected benefits of its introduction.
A mark of one would equal strong agreement, two - agreement, three- neither agree nor disagree, four - disagree, five - strongly disagree.
Interestingly, multinationals disagreed with the expectation that the
Directive would prove to be a boon in the area of investment and custody savings, with most concurring with the suggestion that the new EU pensions law would only provide marginal savings in this area.
The findings of the BASF survey were as follows:
Directive will allow much better exploitation of synergies in the investment and custodial area: 2.63
Directive will allow significant administration savings: 3.44
Directive will allow for no administrative savings outside IT costs: 1.97
Directive is a miracle considering the diverse supervisory approaches: 3.25
Directive will only be a success if supervisory authorities agree quickly their future co-ordination: 1.81
Directive will only be a success if the tax barriers are removed: 1.50
Directive is a big compromise therefore nothing will change: 2.78
Directive eroded advantages of pension funds as compared to life insurance: 3.13
Directive will allow better pension governance and easier implementation of a corporate investment strategy: 2.44