Asset managers will now be able to pool pension funds together to reduce administration costs in Ire...
Asset managers will now be able to pool pension funds together to reduce administration costs in Ireland, following changes to regulation.
There were three changes announced in the Investment Funds, Companies and Miscellaneous Provisions Bill 2005. The main one is the legal framework for the asset pooling structure the Common Contractual Fund (CCF) which provides for a new investment vehicle – the non-Ucits CCF. The legislation also introduces segregated liability at sub-fund level for investment companies as well as providing for the cross investment between sub-funds of investment companies.
The main change in regulation is that institutional investors can pool assets in a CCF. For example, many multinational companies operate pension schemes in a number of different jurisdictions for the benefit of employees in those jurisdictions. When these local pension funds are centralised a number of cost savings are achieved through economies of scale. These savings include a reduction of management fees, administration costs and custodian fees. In addition, the pooling of assets allows smaller individual funds to diversify their risk by using a larger number of investment managers than would be possible if they were to operate on a stand-alone basis.
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