Breakthrough Ideas for 2007

XBRL features as #10 (of 20) in the Harvard Business Review's List of Breakthrough Ideas for 2007. Other ideas we find particularly interesting are #4 (algorithms), #7 (partial attention), #13 (patriarchism) & #20 (accountabalism), of course.

ECJ continues to support cross border pensions

In another important ruling, the European Court of Justice rules against surprisingly recent Danish provisions (law of 2003) permitting tax deductibility of pensions contributions only for institutions located in Denmark in the case C-150/04 Commission vs. Denmark (assisted by Sweden).

Continuing its standing practice, the Court relies solely on the Mutual Assistance Directive 77/799 without having direct recourse to double taxation treaties in order to refute the tax avoidance argument: Furthermore, it must be noted that the mere fact that a taxpayer makes contributions to a pension scheme taken out with an institution established outside Denmark cannot form the basis for a general presumption of tax avoidance or justify a fiscal measure which prejudices the enjoyment of a fundamental freedom guaranteed by the Treaty.

With regards to the cohesion of the tax system, the Court shows that a country's tax system is only adversely affected if the future pensioner takes residence outside of said country before taxable benefits fall due. Since he is entitled to do so under the Treaties, the general refusal to grant a tax advantage is not permissible.

Mortality bonds

Our earlier story seems to have been very topical. epn also has an interesting piece on the securitisation of longevity and recent developments therein. All this coïncides (probably not randomly) with an extreme mortality securities for some mortality risks in France, Japan and the US being successfully issued by SwissRe in November of last year.

Transparency in Greece

It was very interesting to contribute to the Greek Capital Market Commission's conference on the interaction between regulatory authorities and supervised entities and market competitiveness in Athens yesterday. Here are the slides of the short presentation, and this is an audio recording of it.

Pensions barometer

Keeping in line with the unseasonally mild weather, Aon has published its European Pensions Barometer 2006. The purpose of this instrument is to determine which systems are under the greatest pressure, so that material change is likely to be forced to occur in the medium to long term. Given the omnipresent pressure on fiscal policies, such change will invariably affect labour cost, which is why the results are considered relevant for corporate location decisions.

The five countries with the worst pensions climate are Belgium, Slovenia, Greece, France & Malta with the best three being Denmark, Estonia & Ireland. This ranking is generated using four broad macroeconomic categories, only one of which refers to occupational pensions. The categories are evenly weighted. The low weight of occupational pensions makes sense if seen in the context of the barometer's purpose.

The approach is interesting and expandable. Naturally, individual categories and variables are subject to the authors' discretion, but this type of helicopter view is often useful. Unfortunately, important countries are currently missing from the survey's assessment, such as Switzerland, which is certainly an important potential location, or the new EU members Bulgaria & Romania.