Demand for international pension schemes and savings vehicles is continuing to rise beyond just expatriate communities, to protect local employee groups from growing political and economic instability, according to WTW.

As reported by our sister publication European Pensions, the consultancy’s International Pension Plan Survey found that the number of International Pension Plans (IPPs) and International Savings Plans (ISPs) being offered in countries in ‘challenging’ economic or political circumstances rose from 54 in 2019 to 126 in 2024.

It attributed the increase to challenging economic situations, including rising inflation across the globe, and a ‘higher-than-normal’ number of sovereign defaults (18 in 10 countries since 2020) that have made local pension and savings provision riskier for local employees in certain countries.

Employers were increasingly trying to reduce or remove these risks by providing more secure IPPs and ISPs, WTW noted, usually held in trust for additional security to protect employees’ retirement pots from localised instability.

There was an estimated USD 19.5bn of assets under management in IPPs and ISPs globally in 2024, an increase of 33 per cent since 2018, with most schemes (52 per cent) having less than USD 5m in assets, while only 1 per cent had assets of more than USD 250m.

While 56 per cent of IPPs and ISPs operate globally, WTW found that schemes operating in Europe have seen the largest growth, with the number of schemes doubling over the past 10 years and now accounting for 26 per cent of all schemes globally.

Luxembourg was the most common domicile, with 26 per cent of schemes based there, as most providers of contract-based arrangements are domiciled in the country and therefore contracted there by default.

The Isle of Man was the second most common domicile (25 per cent), with the island the most popular choice of domicile for trust-based schemes set up in the past five years (67 per cent).

Guernsey was the third most common domicile (22 per cent), followed by Jersey (21 per cent).

“Economic and political instability in many countries, along with rising inflation have created many challenges for employers looking to provide stable pension and savings arrangements for their employees around the world,” said WTW senior director, integrated and global solutions, Michael Brough.

“IPPs and ISPs can be used to provide a more secure vehicle and deliver better pension outcomes with access to global hard currency investment funds, reducing exposure to local high-risk markets.”

WTW’s report also highlighted the growing demand for environmental, social and governance (ESG) investment options within the fund ranges offered by IPP and ISP providers.

More than half (58 per cent) of IPPs and ISPs offer ESG funds, with WTW predicting this to rise further as scheme sponsors’ interest in reviewing ESG fund ranges grows, with 82 per cent of providers reporting an increase in switching to ESG funds.

Furthermore, the report also observed a growing demand for IPPs and ISPs to offer Shariah investment options, following an increasing number of prospective members who were previously unable to participate due to an absence of Shariah funds.

“We have seen an increase in situations where prospective members of IPPs and ISPs have been unable to participate in plans, due to an absence of investment funds that meet their personal or religious principles,” commented Brough.

“This often focuses on Shariah and so there has been a rise in IPPs and ISPs incorporating more choices across broader Shariah asset classes, not just global equity funds. We expect this to continue to increase in popularity in the years ahead and is not just relevant to IPPs and ISPs, but domestic pensions globally as well.”

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