EU: Lifting tax rules 'would aid retired workers'

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EU: Lifting tax rules 'would aid retired workers'

By Elizabeth Rigby
Financial Times, May 20, 2003

EU - The average retired worker would see his or her pension pot rise by about €120,000 (£86,000) if Europe's asset management market was liberalised, according to research released yesterday.

The Investment Management Association, the industry body, said removing regulatory and tax barriers could boost the value of investments across Europe's asset management industry by about €5bn a year.

Sheila Nicoll, deputy executive, said: "If you did not have the regulatory and tax requirements that we do in Europe, the benefits to the consumer would be about 40 basis points per annum and that would give them 9 per cent more overall. We were surprised it was as much as that. But when you . . .reflect on it, we did realise that European markets are quite fragmented."

The IMA called for measures to encourage cross-border mergers of funds and make fund registration simpler in different jurisdictions. It also called for the end of tax discrimination against non-domestic funds.

"Every one of the 15 member states have some sort of tax discrimination," said Alan Ainsworth, chairman of IMA's European strategy group and deputy chairman of Threadneedle Investment, the fund manager. "It is perhaps the most serious barrier to increasing cross-border business," he added.

The research, conducted by the German-based ZEW Group, also found that 90 per cent of investment funds used by European savers are bought from domestic suppliers. The IMA, whose members manage about £2,000bn in assets, acknowledged that potential gains garnered from liberalisation could take years to feed through.