Dive Brief:
- Twenty-three new international pension and savings plans (IPPs and ISPs) were established in 2015, according to a Willis Towers Watson survey. According to the research, the main strategic intent of the IPPs/ISPs continues to be providing savings or retirement benefits for expatriates, who are often not covered by any home country plans nor participating in a local host country savings or retirement plan.
- The research, now in its eighth year and covering 721 plans sponsored by 638 companies, also indicates companies are using IPPs or ISPs to extend coverage for retirement savings participation to employees in countries where local solutions are unavailable or inadequate.
- With 30% of all IPPs/ISPs being set up in the last four years, they continue to grow in popularity.
Dive Insight:
Brian Makuck, North America Intellectual Capital and Integration lead for the multinational practice, Willis Towers Watson, adds that the retirement vehicle is now also used to deliver pensions and long-term savings to local employee groups in different international locations, such as markets without infrastructure to support a pension offering, or in countries suffering from economic or political uncertainty.
A key driver for this trend is the sponsoring employer’s desire to limit the impacts on employees of potential local losses, e.g., due to defaults. It not only protects the assets underlying employees’ savings, but also reduces the risk of the employer having to pay a second round of contributions to make up for fund losses.
The research also shows investment fund options offered by IPPs/ISPs continue to increase in number and sophistication, due to the diverse demographics and varied currency preferences of members. The survey found 41% of IPPs/ISPs offer over 10 investment funds for members to choose from, with as many as 6% providing over 40 different funds.
