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Michael Brough is the director at Towers Watson, a global professional services company, which released its sixth annual report on international pension plans (IPPs) at the end of last year. The report surveyed 438 IPPs sponsored by 406 companies. The Chicago-based consultant talks about the growing importance of such funds for employers who have staff in the Middle East and Arabian Gulf region.
Who has access to a savings plan like this here in the Middle East?
Around 49 per cent of the plans surveyed were for expatriates. These vehicles can be used for many different purposes. A lot of multinational companies have one they will use for global expats and Gulf nationals in the Middle East, but the same vehicle can be used for expats in Singapore, countries in Africa as well as global nomads who go from country to country. That said, quite a number of the plans are designed for the Middle East only.
Can the local population also access these plans?
They are meant for local national, local expats and global nomads. It is common to have a plan that covers all the countries in the Gulf, and Jordan and Egypt. Employees are able to move about within the company and stay in the same pension plan. And it is mainly for all employee groups. There is a small proportion of plans for executives only – around 10 per cent – and employers make a higher contribution to this.
The report mentioned that six of the 15 new plans in 2013 were set up for local Middle-Eastern based workforces. Why is there an increased focus on this region?
Things got quieter last year. In 2012, there were 14 plans designed for the Middle East. Perhaps reflecting where we are in the cycle of the global downturn, there is quite a lot of activity now. There is more interest in introducing these vehicles often for the purposes of retention and attraction of employees.