US - Northern Trust has announced it has developed a new pension pooling solution to allow multinational companies to commingle US ERISA defined benefit retirement plan assets with assets from non-US subsidiaries in a single offshore pooling vehicle.
“Shortly after we launched the first cross-border pooling vehicle in 2002, US-based multinationals began asking Northern Trust to pioneer a capability that would enable their ERISA plans to participate,” said Kathy Dugan, Northern Trust’s multinational product manager.
“The new Northern Trust ERISA Solution for cross-border pension pooling enables more multinational companies to capitalise on the benefits of bringing cross-border assets together for investment management purposes. By pooling assets from subsidiary pension plans across the globe, including the US, a multinational can more effectively control manager selection and investment risk, simplify administration and gain economies of scale.”
Pension pooling is gaining popularity as companies strive to improve governance and reduce costs. The measure allows businesses running pension funds in several countries to ‘pool’ their assets in a single vehicle, which then invests in assets on behalf of the funds.
Northern Trust said it is the first and only custodian to support cross-border pension pooling vehicles for multinational clients.
Consulting firm Deloitte launched a pension pooling offering late last year and is currently working on expanding the offering to include American-based multinationals. In January this year, partner Gavin Bullock told Global Pensions: “We’ve largely overcome the tax hurdles – the piece that needs to be looked at next is the regulatory and legal framework for US pension funds to invest [in a European vehicle], including the Erisa rules.”
Dugan said Northern Trust was currently implementing tax-transparent vehicles – the Irish Common Contractual Fund (CCF) and the Luxembourg Fonds Commun de Placement (FCP) – for client who want to offer global equity mandates through a pooling vehicle to their pension plans globally.
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