French asset manager Amundi has said it has already attracted 10 multinational companies to use its pan-European pensions vehicle in Luxembourg for part of their pension arrangements.
In an interview with IPE sister publication Pensioen Pro, Christian Lemaire, head of retirement solutions at Amundi, claimed the asset manager was the first to offer a pan-European IORP based in Luxembourg.
The current Belgian route for pan-European IORPs is either provided by consultancy Aon Hewitt or organised by the multinational companies themselves.
According to Lemaire, Amundi’s IORP aims to attract defined contribution plans from France, Spain, Germany, Italy and the Netherlands.
He said a large cosmetics company, a car manufacturer and an international accountancy firm had outsourced part of their pension arrangements to the Luxembourg vehicle but declined to provide details about the participating firms.
Amundi’s IORP provides both pensions administration and asset management, Lemaire added; Dutch companies that relocate their pension plans to Belgium usually place their administration with a provider in the Netherlands.
Lemaire said Amundi had chosen Luxembourg because of its well-developed financial sector and its supervision, “which is no less strict but more flexible than in other countries”.
He said Amundi’s asset management costs for a DC plan in Luxembourg were 30% lower than in other European countries, and that administration costs were approximately €40 per participant, compared with €100 on average for similar services in the Netherlands.
The contentious issue of cross-border schemes has been rumbling on for years in Europe. In 2003, French pension fund UMR Corem abandoned plans to launch a cross-border scheme after the country’s insurance and pension fund authority allegedly sent a letter to the scheme advising it to drop its IORP plans in Belgium.
Meanwhile, the Dutch government has said that instances of companies relocating their pension plans abroad were “undesirable” but unlikely to continue, “as participants now have to agree with such a move”.
Furthermore, responding to queries by Pieter Omtzigt, MP for the Christian Democrats (CDA), Jetta Klijnsma, state secretary for Social Affairs, rejected his assertion that Dutch pension funds relocate to Belgium because of more flexible supervision.
Omtzigt noted that the coverage ratio across the border was 10% higher relative to Dutch funding because of a higher discount rate for liabilities.
Klijnsma, however, argued that the discount rate was merely one element of supervision and emphasised that the Belgian regulator aimed at an “equal protection of participants of cross-border schemes”.
“In addition, under the new IORP Directive, a majority of participants must agree with a relocation, and they won’t if this would come at their expense,” she said.
Klijnsma sought to put the relocation trend into perspective by pointing out that only 19 Dutch pension plans, with 10,400 participants and less than 0.1% of Dutch pension assets in total, were being carried out abroad.
Responding to Roos Vermeij, MP for labour party PvdA, Klijnsma said that, under Dutch rules – and contrary to Belgian legislation – an employer’s guarantee was not taken into account for establishing the required level of a pension plan’s financial reserves, “as a company could go bust”.