28 September 2007

One in four firms consider cross-border pension

A quarter of large European company pension funds are thinking of introducing pan-European pension plans within the next 10 years, consultancy Towers Perrin has claimed.

According to the firm, which surveyed 323 large companies in France, Germany, the Netherlands, Spain and the UK, of the 50 cross-border schemes already in place in Europe, 10 have so far been introduced since the launch of the EU Directive for pan-European retirement provision.

“Companies are beginning to consider that, instead of implementing a full and complicated pan-European pension fund, they could still gain from combining aspects, such as asset pooling, certain types of plans for some countries, or for certain groups of employees,” the researchers explained.

“The main potential advantage of cross-border schemes to the surveyed companies are costs reduction, improved governance/control and risk management,” they said.

Towers Perrin suggests the momentum for such cross-border plans has noticeably increased recently, especially among companies in the Netherlands and Belgium, adding this trend has been prompted in part by Belgium’s introduction of legislation to encourage the establishment of cross-border plans.

This development of cross-border schemes is also likely to be fuelled by the continuing eastward shift of companies’ operations into the new European member states, the consultancy forecasts.

“It makes little sense to offer small-scale pension plans in each of, say, Bulgaria, Latvia, Romania or Slovenia,” said Towers Perrin in its report.