Demand for international cross-border pensions and other savings vehicles for expats and local workers in ‘unstable’ countries is continuing to grow, according to research by WTW.

As reported by our sister publication, European Pensions, its International Pension Plan Survey found that employers were increasingly trying to optimise their benefits packages for different groups within their global workforces.

The survey, which covered 1,023 international pension and savings plans (IPPs and ISPs), found that nearly a quarter (23 per cent) of the schemes surveyed were set up in the last five years.

Furthermore, assets under management of the IPPs and ISPs had increased by 5 per cent year-on-year to US $19.3bn.

Nearly three-quarters (71 per cent) of the schemes surveyed were established with a ‘retirement objective’ (IPPs), while the remaining 29 per cent had a ‘savings objective’ (ISPs).

More than half (51 per cent) of the IPPs/ISPs were set up for expats unable to stay in their ‘home’ country pension schemes, while at the same time being unable to enroll in their ‘host’ country’s pension arrangement or being unlikely to be entitled to a benefit from any host nation scheme.

While the majority were set up for expats, 13 per cent of schemes were established to include local employees, often in countries at risk of economic or political instability.

Egypt was found to be the most popular location for these types of IPPs/ISPs, with 32 schemes including Egypt-based savers, followed by Argentina (31), Lebanon (28), Sri Lanka (16) and Ecuador (15).

WTW found that ESG considerations were an emerging focus for IPPs and ISPs, with 163 schemes having reviewed their fund range in the past year for ESG considerations, including diversity, equity and inclusion audits.

Almost all (94 per cent) of the ISPs/IPPS were defined contribution schemes, with employer contribution rates typically ranging from 10 per cent to 14 per cent.

Banking and finance companies accounted for 26 per cent of scheme sponsors, while oil and gas firms accounted for 9 per cent, and consumer goods and retail made up 7 per cent of scheme sponsors.

“Companies are facing skills shortages in many hotspots across the world and are redefining their employee experience and total benefits offer to stay competitive,” commented WTW senior director, integrated and global solutions, Michael Brough.

“Many multinationals, charities, and international governmental organisations are looking for ways to offer minimum yet sufficient levels of pensions and savings to their global staff.

“Expats are often excluded from joining local ‘host’ pension schemes, or it may be inadvisable for them to do so. And local staff in many countries may also have limited options, or any savings may face the risk of economic instability or local sovereign debt default.

"International plans are a flexible way for employers to offer these vital benefits in a secure and efficient way.

“Companies are looking at setting up IPP or ISP solutions that can meet and fix multiple pensions challenges within the business. These plans can serve various expat groups, such as foreign staff excluded from local plans like the Central Provident Fund in Singapore, or to reward executives subject to capped ‘home’ country benefits. In the Middle East and GCC these international plans can be used to fund mandatory gratuities.”

Share Story: