GLOBAL - Professional services firm Deloitte & Touche LLP has launched a new pension pooling offering which it says overcomes tax hurdles which previously made pension pooling "impossible".
Pension pooling allows businesses running pension funds in several countries to ‘pool’ their assets in a single pension pooling vehicle (PPV). The PPV then invests in assets on behalf of the investing funds.
Tax partner Gavin Bullock (pictured), who heads up the pension pooling team at Deloitte commented: “Multinationals have long sought to exploit the potential benefits of pension pooling. However, whilst advances in custodian systems have enabled pooling for limited investments such as global bonds, regulatory, tax and legal barriers have until now prevented pension pooling for equity investments.”
Bullock said Deloitte had pioneered tax solutions to overcome former barriers to pension pooling.
“One of the main hurdles to pension pooling in the past has been the tax treatment of cross border dividend payments,” he said.
“Critical differences in bilateral tax treaties and variances in withholding tax treatments mean an equity investment is taxed differently depending on the jurisdiction in which it is held.
“Deloitte has analysed the tax implications in a broad range of countries across Europe, North America, Africa and the Asia Pacific region of establishing a PPV.”
Deloitte is working with a range of multi-nationals, custodians and asset managers to practically implement pension pooling and has established a worldwide pension pooling tax team to coordinate pension pooling projects, the firm said.
The benefits of establishing a single pooled vehicle are said to include economies of scale, increased governance and oversight through central coordination and reduced administration.
The firm is currently working with clients to implement pension pooling in practice, Deloitte added.
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