Since these plans must comply with the 2003 European Institutions for Occupational Retirement Provisions (IORPS) Directive, which promotes cross-border retirement arrangements, it means that in future, employers and organisations such as banks, insurance companies and fund managers will be able to pool retirement plan assets from different countries and place them in a PPI.
It is important to note, however, that the PPI will not be permitted to offer guarantees on investment returns or benefits, and will not cover death or disability risks, which must be handled by third parties such as the employer or an insurance company.
Attractive option for smaller and medium companies
Prior to the new legislation, Dutch employers have only been able to use normal pension funds or insurance contracts for their pension plans. The new PPI introduces an attractive additional option that should offer lower costs and less administration, since PPIs have less onerous governance regulations than existing pension funds. This will assist smaller and medium-sized companies in particular.
The introduction of the PPI in The Netherlands means that Europe now has another attractive location, in addition to Belgium, Ireland and Luxembourg, where multinationals can set up a pan-European pension fund for their employees.
Since April 2008, Swiss Life provides an IORP vehicle - the Swiss Life International Pension Fund a.s.b.l. - to its multinational clients:
- Legal form: asbl (non-profit making association)
- Under the supervision of the Commissariat aux Assurances (CAA) in Luxemburg
- Pension fund platform with “Multi-Employer” and “Multi-Industry structure
- Authorized to conduct cross-border activities, also outside the EEA
- Offers Pan-European pension solutions (DC) and pension plans for expatriates to MNCs based in EEA
- Biometrics risks can be born by the IORP itself, or outsourced to a third party
- High degree of flexibility in the investment of plan assets (prudent principle applies)
- Ring-fencing in financial stress situations is allowed for DC plans
- Social committees at scheme level are possible