EUROPE - Multinationals with defined contribution plans in Eastern Europe are starting to favour pan-European vehicles instead, John Hall, head of the international consulting practice for EMEA at Mercer said.
Speaking at Mercer's International Pensions and Benefits Forum in London yesterday, Hall said: "There's a lack of credibility in the system. A lot of Eastern European countries...have platforms that are not sustainable for private clients."
"One of the areas that we're looking at is the possibility of pan-European vehicles to replace that," he added.
He said defined contribution plan structures put in place 10-15 years ago still have kinks that make them unattractive to companies used to more advanced retirement systems.
"The infrastructure around that - the investment around that, the governance around the custodianship of assets and things like that - is tricky and hasn't been well defined," said Hall.
As a result, plan sponsors often find a lack of good governance over how these schemes are managed, spiralling costs, or because of a lack of proper administration, an inability to even deliver statements to members, Hall said in a later interview with GP.
GP reported last year that interest in pan-European pension arrangements were on the rise after Deutsche Bank launched an asset pooling vehicle in Luxembourg for its European employees and clients. (Global Pensions; December 4, 2009)
In February of this year, research from Hewitt Associates showed a third of multinational companies planned to launch pan-European pensions by 2015. (Global Pensions; February 25, 2010)
Hewitt Associates senior international consultant Paul Bonser said at the time: "The pan-European pensions market is on the cusp of significant growth. Companies have been expressing an interest in consolidating their pension arrangements for some time, but have been somewhat reluctant to be the first to test the water."
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