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Cross-Border Pension Plans in Europe Where Do We Go From Here?

Cross-Border Pension Plans in Europe Where Do We Go From Here?. Anne Maher Chief Executive The Pensions Board Ireland 29 August 2006. Agenda. Cross-Border Plans What is now possible? How is this likely to develop? Where will these plans locate? Next steps. 2. What is Now Possible.

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Cross-Border Pension Plans in Europe Where Do We Go From Here?

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  1. Cross-Border Pension Plans in Europe Where Do We Go From Here? Anne Maher Chief Executive The Pensions Board Ireland 29 August 2006

  2. Agenda Cross-Border Plans • What is now possible? • How is this likely to develop? • Where will these plans locate? • Next steps 2

  3. What is Now Possible Legal Background • EU aim to achieve Single Market for pensions • EU Communication on “The Elimination of tax obstacles to cross-border provision of occupational pensions” (April 2001) • EU Directive 2003/41/EC on “the activities and supervision of Institutions for Occupational Retirement Provision” known as the “Pensions Directive” (September 2003) • The Pensions Directive to be implemented into Member State legislation by 23 September 2005 3

  4. What is Now Possible EU Pensions Directive Principles • Sets framework for pension scheme supervision • Effectively sets common minimum level of supervision • Moves towards freedom of investment for pension schemes • Facilitates cross-border pension schemes • Provides possible legal framework for Pan European pension schemes 4

  5. What is Now Possible • Investment pooling cross-border - already possible and happening • Pooling of liabilities • Pooling of administration 5

  6. Development of Cross-Border Business Types of Cross-Border IORPs • Existing plans which relocate • New employer sponsored cross-border plans • New commercial cross-border arrangements 6

  7. Development of Cross-Border Business Who is Interested • Multinational Employers • For pooling or merging • Employers with Existing Pension Plans • For regulatory or financial advantage • Commercial IORPs Providers • Looking to sell pensions cross-border 7

  8. Development of Cross-Border Business Reasons to relocate • Multinational employer • Better governance/control • Single governance regime • Economies of scale/cost savings • Facilitate corporate change/culture • Accommodate mobile employees • Single employer/single country plan • Regulatory/supervisory regime? • Financial advantage? 8

  9. Development of Cross-Border Business Drivers • Commercial Beneficiaries • For-profit IORPs providers • Advisers to multinationals • Potential providers of cross-border management and administration services 9

  10. Influence on Cross-Border Business Choice of Location • Tax arrangements • Investment opportunities • Pension tradition/services available • Availability of tried and tested pension skills/resources • Regulatory/compliance structures and environment • Ability to accommodate countries outside EU 10

  11. Impact on Cross-Border Business Regulation • Balance between reasonable cost and member protection • Transparent/open environment • Reasonable level of investment freedom • Respected regime • No regulatory arbitrage 11

  12. Impact on Cross-Border Business Obstacles • Social and Labour Law • Tax • Defined Benefit Funding Standards • Pension Reform • Member State attitude • Inexperience • First mover disadvantage 12

  13. Location of Cross-Border Business • Any Member State • Attraction of Luxembourg, Ireland, UK, Dutch pooling vehicles? 13

  14. Ireland as Pensions Location • Tax arrangements • Irish law incorporates cross-border tax reliefs • Investment opportunities • Common Contractual Fund (CCF) • Pension tradition/services available • Ireland has long established private pension structure • Availability of tried and tested pension skills/resources • Investment, Actuarial, Accounting, Legal, Benefit consulting, Benefit administration, Compliance skills available in Ireland • Regulatory/compliance regime • Acceptable and balanced regulation by open and accessible regulators supervisors in Ireland • Ability to accommodate countries outside EU • Global services available in Ireland 14

  15. Ireland as Pensions Location • Pan-European Pensions Task Force • Examining opportunities in international pensions area • Will facilitate initiatives/changes • Suite of asset pooling vehicles • Unit Trust (Fixed Income Investments) • Limited Partnership • UCITS CCF (Equities Investments) • Non-UCITS CCF (Alternative Investments) 15

  16. Next Steps • Implementation of Directive by all EU Member States • Clarification of some Directive requirements • Protocol in operation between Member State pension supervisors • Consideration and decision on location by pension scheme sponsors and commercial providers 16

  17. In Conclusion • Pensions Directive • Is first step in single market for pensions • Provides a framework for change • Investment/asset pooling is happening • Liability pooling and centralised administration are next steps • Full Pan-European Pension Funds • Will take time • But WILL come about 17

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