The Pensioneer Trustee Company (Guernsey) Limited
T +44 (0) 1481 743760
For large corporations with employees operating in a number of different countries, the issue of how pension provision is organised can very quickly become complicated. Having numerous plans for various locations in the world, whether it is America, the UK, Europe or in Asia, can involve a great deal of administration. Even if the solution is to keep the pension entirely in the home country of the employee, this can be sub-optimal and not provide the financial benefits a top earner is looking for.
Having one provision such as an International Pension Plan, or IPP, is one solution that cuts down on much of the confusion and makes pension provision more streamlined, easy to understand and, in a lot cases, more attractive. For global nomads, it’s also a good way to keep all contributions in one, simple to maintain and understandable scheme.
The Benefits of an IPP for Global Nomads
Moving to different jurisdictions which have their own rules and regulations for pensions and payments is problematic, especially for those who only spend a few months or years in one location.
If an employee is relocating from one place to another, their pension might be adversely affected by new regulations and factors such as exchange rates. Keeping the pension in one IPP in one place is therefore should be beneficial.
Jurisdictional differences can include not having favourable employee pension regulations in place for either tax, regulatory or legal reasons. There may also be caps on contributions and lack of flexibility, something that many high performing staff want for their pension scheme. Providing an IPP can make sure that valuable employees are given the financial package they are looking for.
Switching to an IPP for global nomads means there is more control and less hassle when they make the move to another country. There are no caps and the benefits remain the same so that you have a clear idea of what is in a pension plan, how it is performing and the contributions that have been made.
While global nomads benefit as individuals from having their contributions in an IPP, they are also more likely to work and stay with companies that operate such schemes. Providing future financial security for employees is important and, if businesses want to attract top talent, having the right remuneration packages in place is vital. With many mobile employees not staying in one location long enough to build up strong local pension pots, a different solution is needed.
Setting up a global pension plan for all mobile employees is not without its challenges and choosing the right location, such as Guernsey, for the scheme is important. You need to introduce a plan that is flexible enough to cater to high earners and the globally mobile population. You also need to identify your target group so that you can maintain consistency wherever they are employed in the world.
Where having a home pension or one in the host country is not the most beneficial solution, International Pension Plans are an attractive alternative and a solution that many large corporations with overseas employees are turning to.