Pension Pooling Vehicles

A company that is active in several countries, and which seeks to achieve some of the efficiencies of a pan-European pension scheme without setting up a dedicated structure, can do so by pooling its pension scheme assets.

Pension pooling allows companies operating in several countries to pool their scheme assets into a single vehicle, which in turn invests in a diverse range of assets. As the pooling vehicle is composed of several asset classes, a number of pools may be created to match the varying objectives of pension sponsors. This framework retains the local character of pension schemes, allowing them to be offered as local products in their country of origin, ensures compliance with local legal or regulatory requirements and potentially avoids discriminatory taxation on cross-border contributions to, and payments of benefits from, pension schemes.

Pension fund pooling vehicles can take two different forms. They can be launched by an asset management company or a custodian to bundle assets for a certain asset class (for example US equities, emerging market fixed income, etc.); the promoter then offers this pooling vehicle to different client companies. Alternatively, a pension fund pooling vehicle can be operated by a multinational company that is interested in pooling the pension assets of its affiliate companies throughout Europe or beyond.

Pension fund pooling vehicles can be set up either as a transparent structure (FCP or "fonds commun de placement") or as a corporate structure (SICAV or SICAF).