NETHERLANDS - International business and information technology consultants AMS Management Systems has applied to the UK Inland Revenue for approval to place one of their UK employees in their company pension plan in the Netherlands.
The firm’s Dutch pension plan presently only contains employees working in the Netherlands. AMS have requested that both AMS in the UK and the UK employee be granted the same advantageous tax treatment for the employee’s membership of the Dutch plan as is afforded to membership of AMS’s UK pension scheme.
It is anticipated that the UK Inland Revenue will refuse AMS’s application because the UK, like many other EU Member States, does not recognise foreign countries’ supplemental pension systems as being equivalent to domestic schemes; consequently, it does not grant the same beneficial tax treatment available to domestic schemes. It is widely accepted that such discriminatory tax treatment of foreign pension plans by EU Member States is the main barrier to the creation of pan-European pension funds in Europe.
If AMS’s application is indeed refused, AMS intend to seek a judicial review of this decision in the UK courts, from which they would, if necessary, seek a reference to the European Court of Justice in Luxembourg. Should the case reach the ECJ, it could have far-reaching consequences for the UK and the European pensions industry. If the ECJ eventually issues a clear ruling declaring the UK’s alleged discriminatory tax treatment to be contrary to European law, this would open the way for multinational companies to place all their EU employees in one pension fund without suffering the discriminatory tax treatment that currently presents an obstacle to establishing pan-European pension schemes.
The AMS case is being supported by the Pan-European Pension Group (PEPGO), an association of 20 multinational companies that seek greater freedom to create cross-border pensions. In addition to AMS, the group includes insurer Swiss Life and construction company Kvaerner. PEPGO is managed by Mercer Human Resource Consulting and Geoffrey Furlonger, an independent European lawyer and consultant.
AMS are also being advised by leading European pension lawyers including Linklaters & Alliance, Eversheds, and barrister Nicholas Khan from Blackstone Chambers.
Commenting on the case Furlonger said: The AMS application is particularly significant as it involves the two EU member states with the largest pension funds under management. It also involves an employee who intends to reside in a single country, which would be the case for the vast majority of members of future pan-European pension schemes.
Paul Kelly, a partner at Mercer Human Resource Consulting, added: The timing of this test case is particularly appropriate given current developments regarding the EU Pension Fund Directive.
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.