LUXEMBOURG – Northern Trust says it is working with two multinational companies on Luxembourg-based tax-transparent pension pooling.
Ian Baillie, senior vice president and managing director of Northern Trust’s Luxembourg office, said the bank is working with two multinational corporations as well as Goldman Sachs and Mercer Investment Consulting. He declined to name the companies, both pension plan sponsors.
“Northern has been working on this for three years,” he said in an interview. “The question for these companies is ‘how do we give the same opportunities to pension plans around the world?’”
The comments follow the Luxembourg government’s decision to abolish its 0.01% subscription tax for multi-national corporations wanting to set up investment vehicles in Luxembourg to pool cross-border pension assets.
The Grand Duchy’s banking and investment trust association had lobbied government to make abolish the tax. Consulting firm Deloitte said in a report in May that the move had rehoned the Fonds Commun de Placement’s competitive edge against its Irish counterpart, the Common Contractual Fund.
Baillie said there was now “much more of a level playing field between the two domiciles”. He added that Northern had looked at around 30 jurisdictions and found Luxembourg most beneficial, for both domicile and vehicle.
IBM is thought to be looking at becoming one of the first multinational companies to use Ireland’s CCF to pool its pension funds’ global equity assets. Baillie said the expected IBM move was “the tip of the iceberg”.
“The vehicles are all in place - it’s a case of multinational biting the bullet. Everyone talks about pan-European pension funds – the great thing about this is it’s global.”