Pension Pooling Profits
Pension pooling allows multinational companies operating pension funds in several countries to pool assets into a single pension pooling vehicle.
The pension pooling vehicle then invests in assets, such as global equities, bonds and cash, on behalf of the investing pension funds.
One of the main advantages of pooling is that instead of having a number of pension funds in various locations having different investment managers, administrators and custodians, a more streamlined approach is adopted so that the assets are managed centrally in the pooling vehicle.
As a result, pooling offers considerable economies of scale, particularly for smaller pension funds, and this in turn leads to cost savings and enhanced returns. It also provides greater consistency in asset management and enhances control over investment risks.
In some cases, the pooled fund can employ the services of asset managers who would not otherwise accept their business.
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