IRELAND - IDA Ireland, the Irish State Investment and Development Agency, has announced a new product initiative aimed at the corporate pensions market in Europe.
This product is based on the creation of a group life assurance company by large multinational companies (MNC) which currently operate multiple pensions plans in Europe. The group company would initially provide pension products for the mobile employees of MNCs from an Irish regulated entity, which would benefit from the freedom of services available throughout the EU for life-based products.
IDA Ireland commissioned William M Mercer to study the application of the new product in the main European countries and among their conclusions is that in respect of mobile employees: The concept might gain a competitive advantage over competing solutions (e.g. Luxembourg) from the generally superior tax treatment of cross border insurance policies as opposed to international pension funds.
In addition Mercer said: Further efficiencies may be possible if a number of MNCs combine to create a single large captive (or use an existing provider) rather than multiple smaller captives.
The concept also puts in place the structural basis for a comprehensive consolidation by MNCs of pan-European corporate pensions when the taxation and regulatory obstacles are eliminated as now seems increasingly likely.
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