EUROPE - Two multinational companies are considering moving their Dutch pension activities into a pan-European pension scheme based in Ireland, claims Mercer.
The remaining hurdle is the go-ahead from the Dutch pensions supervisors De Nederlandsche Bank (DNB) and the Financial Markets Authority (AFM), said Tim Burggraaf, chairman of Mercer's pan-European working group.
At the moment Mercer is preparing all documentation so the supervisory bodies can check Mercer's Ireland-domiciled pensions vehicle on aspects such as tax transparency and social security rules. Burggraaf said he expects a decision later this year.
According to Burggraaf, who declined to mention the companies involved, Mercer's vehicle aims specifically at collective defined contribution schemes with individual investment choice for the participants, "because they have a more simple set-up than defined benefit schemes".
"Any remaining collective DB part of the companies pension schemes could be placed with an insurer. Subsequently, the whole pension fund could be abolished if remaining asset classes are too small to be effective," he added.
Mercer's Irish pension vehicle is a master trust, which can be joined by more than one employer. "Its centralised structure will lead to lower operational costs, increased efficiency and better governance," Burggraaf said.
According to Burggraaf, Mercer has already obtained clearance of the pension supervisors in Ireland and the UK for their national schemes to join Mercer's DC Master Trust, but is still waiting for consent of the respective tax authorities.
"Within 18 to 24 months, we hope to have received the green light from all other major pension regulators within the EU," he said.
Earlier this year, the Dutch government announced the introduction of a new pensions vehicle - known as API - to bolster the Netherlands' position as a destination for pan-European pensions.
The proposed vehicle will fit the criteria of the IORP Directive. It can operate as a subsidiary of a pension fund or an insurer, and will also be able to act as a pensions provider.
At present, social affairs' minister Piet Hein Donner is still studying how the tasks between the API, pension funds and insurers should be demarcated before a consultation process can start.
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