The Pensioneer Trustee Company (Guernsey) Limited

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International Pension Plan market expands rapidly

February 25, 2013

LONDON – Monday 25 February 2013 – Thirty-three new International Pension Plans (IPPs) have been established in 2012, according to a Towers Watson survey of multinational employers, bringing the total number of IPPs managed by the responding employers to 403. The company’s latest International Pension Plan survey, now in its fifth year, also indicates that IPP’s are being developed within multi-country pension frameworks, including Pan-European structures, known as Institutions for Occupational Retirement Provision (IORP’s).

Michael Brough, senior consultant at Towers Watson, said: “The growth of the IPP market is mainly driven by more companies offering IPPs for international or expatriate employees to either ‘top up’ or replace home country retirement plans. We also see more multinationals extending the eligibility of existing IPPs to allow local workforces to join the IPP, where possible. This illustrates the continuing trend for these vehicles to be set up where local alternative arrangements are inadequate or absent.

“Expatriate pension vehicles can be used to deliver pensions and long term savings to diverse groups, such as nationals living in the Middle East, parts of Asia, Africa and Latin America. These are generally viewed as markets that may not have the developed infrastructure to support such a pension offering.”

According to the survey, multinationals are using creative ways to include multiple groups into a single pension structure, which can deliver synergies through the use of a single administrator, a single investment platform, and a single governance framework, which supports mobility, portability and cost reduction. Other creative approaches identified in the survey are the development of member decision-making tools and smartphone technologies. 

Michael Brough said: “We see big improvements in provider propositions through the development of these tools and technologies to address mobility, portability and cost reduction. These tools include individual rate of return calculators, projection tools, risk assessment tools and smartphone apps to enable fund value and contribution history viewing. Given the typical IPP membership, the use of these online and mobile tools will appeal to global workers and those based in remote locations’.

“IPPs are proving to be a good way for multinational companies to provide their employees with access to low-cost savings arrangements, particularly for those of their employees that might struggle to find good individual alternatives, especially in countries with immature investment markets.”

 
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The Pensioneer Trustee Company (Guernsey) Limited is licensed by the Guernsey Financial Services Commission under The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 and subject to The Pension Licensees (Conduct of Business) & Domestic and International Pension Scheme and Gratuity Scheme Rules (No.2) 2017.