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					The Future Structure of
Pan- European Pension
  Funds and Plans

             by Geoffrey Furlonger

              London, March 2004
      Current Position in EU

• The law is now relatively clear, but how will
  EU Member States behave?
        Current Position in EU
• States who do NOT discriminate against cross-border
  pensions or probably will not in near future
     - The Netherlands
     - Germany
     - Finland
     - Sweden
     - The UK ? Note: PEPGO and AMS application to UK
       Tax Authorities
     - Ireland
     - France !?
     - Spain !
• I.e. Pan-European Pension Funds possible in very
  near future.
   Structure of Pan-European
        Pension FUNDS

                  Single Fund
                in Luxembourg



NL Plan   UK Plan   Irish plan   German Plan
 in NL     in UK    in Ireland    in Germany
Structure of Pan-European Pension PLANS
    (incorporating pan-European fund)

                 Single Fund e.g. in Luxembourg



                       Common Plan rules


Schedule A      Schedule B       Schedule C       Schedule D
 Variations      Variation        Variation        Variation
  for NL          for UK         for Ireland     for Germany


 Note: Example Multicompartimental SEPCAV or ASSEP in Luxembourg
 Which Country for Centre for
Pan-European Pension Funds /
           Plans?
Favourites

1.   Luxembourg
2.   Ireland
3.   The Netherlands ?
4.   The UK??
5.   Offshore centres – Jersey, Guernsey, Isle of
     Man etc.?
                 Luxembourg

Advantages                   Disadvantages
1. International legislation 1. Little experience in
   already in place             administration of
2. Low Tax Environment          international pension
3. Multi-lingual                plans prior to 1999
4. Financial Sophistication
                        Ireland
Advantages                    Disadvantages
1. Legislation in place for   1. Not Multilingual
   pooling pension final      2. Little experience in
   assets                        administration of
2. Long history in Pension       international pension
   Fund Administration           plans
3. Financial Sophistication
4. English is main language
   (attractive for U.S.
   multinational)
5. Tax Environment?
             The Netherlands

Advantages                  Disadvantages
1. Strong history in        1. International pension
   successful pension          legislation not yet in
   fund regulation and         place
   administration           2. High National Tax
2. Financial Sophistication    Environment (but is
3. Liberal Tax Regime          this important for Pan-
4. Multi-lingual (?)           European Pension
                               Plans?)
         The United Kingdom

Advantages                 Disadvantages
1. Long history in         1. International pension
   pension fund               legislation not yet in
   regulation and             place
   administration          2. Unfavourable financial
                              regulation e.g. tough
2. Financial                  minimum funding
   sophistication             requirements
3. Liberal tax regime ??   3. Unfavourable tax
                              regime ??
    Offshore Centres e.g. Jersey,
             Guernsey
• Long experience in administration of
  international pension plans
  but
• Outside scope of EU Directive and ECJ tax
  rulings – therefore cannot offer legal tax
  efficient and tax compliant pan-European
  pension plans.
                 Case Study
• Finnish Multinational
• Static employees in Finland and the Netherlands
• D.C. plan based in Luxembourg (SEPCAV) based
  on EU Directive and ECJ cases
• I.e. "test-tube" tax approved pan-European
  Pension Plan
                               Finland
                         Employees + Sponsors




       The Netherlands
         Employees




Luxembourg
 SEPCAV
Use of Group Life Insurance to
Fund Pan-European Pensions
• Note. Group-life insurance policies regulated
  by 2nd and 3rd EU life insurance directives
  might be used to fund pan-European pension
  plans and thus avoid restrictions of EU
  pensions (IORP) directive.
• Tax position not yet clear.
               Conclusion

• Take- Off for tax approved pan-European
  Pension Plans for Multinationals in very near
  future.

				
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