EIROForum DG Assembly - Théodore Economou CEO, CERN Pension Fund

EIROForum DG Assembly

Task Force on the Establishment of a
Pan-European Pension Fund
Status Update

Théodore Economou
CEO, CERN Pension Fund          5 May 2014
theodore.economou@cern.ch

Executive Summary

 • Task force working on establishment of a Retirement Savings
   Vehicle for European Research Institutions (RESAVER)

 • Single, multi-employer pension fund operating across European
   countries

 • Allows researchers to remain affiliated to same pension fund, while
   move within EU/EEA and changing employers

 • Consortium of interested employers to be launched by end of 2014

 • Start-up financing provided by European Commission

            Designed to Allow Leveraging Intellectual Capital
                      Of Researchers Across EEA
                                                                         1

Timeline
 • 2003: EC directive on Institutions for Occupational
   Retirement Provision (IORP) makes possible cross-
   border supplementary pension funds

 • 2009: Feasibility study launched by EC

 • 2011-12: Informational Workshops confirm interest of
   research institutions

 • 2013: Establishment of Task Force for the establishment
   of a pan-European Retirement Savings Vehicle

 • 2014: Launch of Consortium for interested employers
      RESAVER: First-Ever Pan-European Retirement Vehicle
                                                            2

Task Force Membership
  The Task Force membership includes representatives from:

  •   Association of Universities in the Netherlands (VSNU),
  •   Italian National Research Council (CNR),
  •   Cambridge University,
  •   Gent University,

  •   Elettra Sincrotrone Trieste,
  •   Technical University of Vienna,
  •   Central European University,
  •   European Organization for Nuclear Research (CERN),

  • League of European Research Universities (LERU) (Observer)
  • European University Association (EUA) (Observer).

                                                                 3

Why a Pan-European RSV for Researchers?
(RESAVER)
  • A key priority is for the European Research Area (ERA) to be more open,
    competitive and attractive.

  • Retirement benefits has been identified as one of the barriers

  • To remove this barrier it is necessary to ensure continuity of the
    accumulation of pension benefits as professionals move to different
    organisations and to different countries.

  • To achieve this objective it will be necessary to
     • Make supplementary pensions compatible with mobility
     • Establish a pan-European pension arrangement
     • Secure adequate, safe and sustainable pensions for researchers
     • Offer market competitive supplementary pensions (asset pooling)
     • Ensure multi-country pension tracking

          EC Launch Financing to Allow Reaching Critical Mass
            (countries, participating organisation, members).
                                                                              4

RESAVER: How it Works
                                                       Cross-Border
                  RESAVER
                                                        Master Trust
           Cross-Border Pension Fund
                                                       (Holds Assets)

       UK Section                NL Section                   •   Supplementary Pension vehicle
 Complies with:             Complies with:                        qualified under IORP directive
 • UK Tax Law               • NL Tax Law
 • UK Social & Labour       • NL Social & Labour         …
   Law                        Law                             •   Employers participate in Section
                                                                  applicable to them
 •    Benefits paid as if   •    Benefits paid as if
      from a UK scheme           from a NL scheme             •   As employees move between
                                                                  countries, they just change
     Institution XYZ            Institution XYZ                   sections, provided their employer
                                                         …        participates in RESAVER
           (UK)                       (NL)
Employees in UK             Employees in NL …

                      A “Single Phone Number” for Pension Matters
                            throughout a Researcher’s Career
                                                                                                5

RESAVER Pension Plans Vary by Country
  • Different pension plan designs for each section, in order to comply
    with local labour and tax laws

  • Parameters to be defined by Consortium of employers

  • Parameters to include, inter alia:
     • Range of Employer + Employee contribution levels
     • Universe of available investment choices (depends on local
       labour and tax laws)
     • Retirement age
     • Distribution options, etc.

  • Defined Contribution (DC) structure ensures:
     • Pre-defined level of contributions
     • Minimimizing risks for employer (within possibilities of local laws)
     • Safety of participant assets

                    Flexibility in defining parameters                    6

RESAVER: Benefits for Participants
 • Participation open to any employee of an institution whose primary
   activity is in research (provided employer participates, i.e., makes
   employer contributions to RESAVER)

 • Tax-advantaged pension provision (within local laws)

 • Single point of contact for pension fund matters through their entire
   career (as long as employers make pension contributions to RESAVER)

 • Low costs due to leveraging large pool of cross-border assets

 • Access to best-in-class investment choices due to leveraging
   RESAVER size (within local labour and tax laws)

 • Additional section for private savings (“3rd Pillar”) for employees
   leaving with a lump sum (within local laws, non tax-advantaged)

     Ultimately, Researchers Should be Able to Remain with RESAVER
                    Throughout Their Research Career                     7

RESAVER: Benefits for Employers
  • Enhanced attractiveness as employer for mobile employees

  • Ability to provide best-in-class pension solution, by leveraging
    large multi-employer structure

  • Low administration costs (due to multi-employer structure)

  • Single point of contact for pension fund matters (as member of
    RESAVER Consortium of employers)

  • Competitive option for lump-sum of departing employees:
     • Pension transfer if new employer participates, or
     • Competitive savings vehicle (3rd pillar)

  • Contribution to building strength of European research, to
    increase competitiveness, attractiveness, and openness of ERA.

            Best-in-Class Retirement Vehicle at Low Costs;
          Contribution to Enhancing European Research Area             8

Consortium of Employers

  • Represents employers in their relationship with RESAVER

  • Allows members to participate in building RESAVER

  • “Full Member” status for employers intending to participate in
    RESAVER and define pension plan parameters

  • “Associate Member” status for employers wishing to follow
    developments

  • Joining Consortium allows Employers to define the future
    retirement plans to be offered by RESAVER

                Consortium to be Incorporated in 2014, as
             “International Association” Under Belgian Law           9

Consortium Governance

                        10

Next Steps
 • Information sessions across Europe, driven by significant interest
   from European Universities and Research Institutions:

     • Information session in Rome, Italy, sponsored by Centro
       Nazionale delle Ricerche (March 2014)

     • Information session in the Netherlands, sponsored by
       Association of Universities in the Netherlands, with
       participation of pensions ministry (27 June 2014)

     • Other information sessions being scheduled

 To Learn about Joining the Consortium and/or Attend Information Sessions,
                              Please Contact:

                     Andreas Dahlen, Policy Officer,
                   Email: andreas.dahlen@ec.europa.eu,
                             Tel: +32 229-58515
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Q&A

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