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Mercer sees no chance for pan-European DB

EUROPE - Defined benefit pension schemes may never be achieved at a pan-European level, according to consulting firm Mercer (corrects spelling of Stainier).

Denis Stainier of Mercer's Paris office believes that only the defined contribution schemes will lend themselves to the pan-European format. "It will be too difficult to move the demographic risks of defined benefit schemes from one country to another.

“The most we will see in the case of DB schemes is asset pooling, which multinationals are already using. I do not think that we will ever see fully pan-European DB schemes." He was speaking at an event organised by French pension association AFPEN.

Stainier believes that on a broader level, progress towards pan-European company pension schemes still needs to overcome two main obstacles.

The first lies at the door of Europe's individual nation states. "There is a lack of clarity regarding the efficiency of cross-border tax mechanisms," Stainier said. "The tax protectionism of national tax authorities is holding things up."

But there is also a broader psychological problem. Stainier added: "There is also a social barrier. It is difficult for people to accept the idea of transferring an element of control to a virtual body somewhere in Europe. All countries need educating about this."

Stainier noted that the pan-European pension scheme would develop in two main stages. "I can see pan-European pension schemes developing quickly for intra-European mobile employees," he said. "But for static employees they are further off."

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