Gold Magazine March - April 2013, Issue 24 | Page 87

pension funds

and their assets together
in cross-border or PanEuropean Pension
Funds. More importantly, he notes, some locations permit non-EEA
employers to establish
retirement arrangements
through their IORP
vehicles covering employees both within and
outside the EEA.
Financial institutions
also recognize the opportunities presented by the
EU Pensions Directive.
Insurers, asset managers,
administrators, consultants and even banks and
custodians could benefit
from the new market
opening and reach out
to clients via IORP
vehicles. Mannaris indicates that in the past,
entering other occupational pensions markets
within the EEA has been costly in terms of
local regulatory requirements or impractical

How to Earn
€50 million

A

on Hewitt has estimated the
potential financial benefits that
the development of Cyprus as a
location of choice for cross-border
pension funds could generate for the Cypriot
professional services industry, considering
the following service sectors: Legal & Audit,
Administration, Custody, Asset Management, Brokerage and Consulting. “We have
analysed the potential fees for each service
sector and applied this to conservative estimates for Cyprus’ market share of total pension assets in each distinct opportunity. The
overall fee basis assumed was priced very
competitively at a total of just
above 100bps of assets under
management”, Philippos Mannaris says.
On the above basis, the company estimates that these
opportunities could generate
an additional €50 million
per year in professional
service fees in Cyprus.
This currently is equivalent to around 0.3% of
Cyprus’ GDP.

using the 3rd Life Directive. The Pension Directive provides a viable access to other markets
through the principle of mutual recognition
and freedom of services of IORPs.
Philippos Mannaris explains that two routes
are open for financial institutions: “The first
route is to create an in-house IORP subsidiary.
Operating through an IORP subsidiary means
a different regulatory framework, with different funding requirements, different applicable
laws, different cross-border procedures, etc.
These IORP subsidiaries are multi-employer
vehicles, which can accommodate various
clients. The second route is to set up singleemployer IORP vehicles for clients. In this
case, the financial services provider acts as a
“building block provider of services to clients,
such as investment management, re-insurance,
administration services, and so on”.

Opportunities for Cyprus

The CEO of Aon Hewitt Cyprus believes that
Cyprus can expect major potential benefits
if this initiative leads to a fully developed, efficiently- functioning and competitive framework making Cyprus a location of choice for
cross-border European pension funds (IORPs).
“We anticipate that major benefits for Cyprus will arise from Cyprus-based financial
institutions offering occupational pension
arrangements in multiple jur