EUROPE - The majority of European multinational companies would like to develop cross-border pensions but differing regulations among member states and uncertainty over changing European rules are giving plan sponsors pause, AEGON finds.
In its most recent AEGON Global Pensions report, the firm found 80% of respondents to its European survey supported the idea of cross border pensions in principal, but more than half doubted their ability to carry it out.
Since the implementation of the institutions for occupational retirement provision (IORP) directive in 2003, European legislation meant to encourage the creation of cross border pensions, a mere 80 such schemes have been set up.
The low take-up is in part due to the fact that "pensions sit in a gray area straddling various areas of national European laws and regulations", AEGON said.
Though the European Union has some oversight over elements of national pensions, each member state oversees the structure and management of their own pensions. Meanwhile, the EU internal market for financial services applies, at least partly, to pensions, and there are questions about whether the current European crisis will affect the role the EU plays on national pension systems.
Separately, the extent to which benefits can be harmonised across countries is not made clear in the existing IORP directive.
"For the operation of a cross-border Defined Contribution plan between the UK and the Netherlands, a recent Holland Financial Centre study showed that more than 100 articles of UK social and labour law would have to be adhered to by the Dutch-based DC plan," AEGON wrote.
The EU has taken two steps to address pensions among member states. One was the recent issuance of its Green Paper on pensions which asked for feedback from the investment community on various issues including cross-border pensions.
The IORP directive is also under review, and the new version will tackle issues around creating common standards for the risk-based supervision of IORPs, among others. Proposals for the IORP II Directive will be released in 2013.
Despite these hurdles, AEGON found the companies more likely to already use cross-border pensions are those where a strong tradition of defined benefit plans are well-established and those that have strong in-house pensions expertise.
AEGON coined these ‘trailblazers' and found many others were taking a wait-and-see approach to cross-border pension, waiting to see how the early-movers tackle issues around this relatively new offering.
One respondent said: "The idea of a European pension fund is good, but the situation has to improve - the hurdles are presently too high."
The currency union faces four possible growth scenarios
Michael Bow talks to Matti Leppälä
EUROPE - Mercer has launched a service to help trustees and other institutional investors meet their stewardship requirements.
That the third quarter was turbulent was no surprise. But recently released funding figures for pension funds and asset under management figures for asset managers have helped us crystallise the cost of the uncertainty surrounding the future of the EU...
Pension funds could soon have to bear the cost of a Europe-wide tax on equity, bonds, currency and derivative transactions, finds Lynn Strongin Dodds