Demand for international pensions and savings vehicles is continuing to grow as employers try to optimize their benefits packages for different groups within their global workforce, according to a new survey by WTW.

Its 15th annual international pension plan survey, which covered more than 1,000 international pension and savings plans sponsored by 955 organizations, found about a quarter (23 per cent) of these plans were set up in the last five years, reflecting the growth in demand. The surveyed plans’ assets under management reached US$19.3 billion in 2022, up five per cent from the previous year.

Around half (51 per cent) of the plans were set up for expatriate workers unable to stay in their ‘home’ country plans, while at the same time either locked out of their ‘host’ country arrangements or likely not entitled to a benefit from any potential ‘host’ plan.

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However, the survey noted international pension and savings plans can also solve savings problems for various other employee groups. Indeed, it found 13 per cent of plans were established to include and serve local employees, often in countries at risk of economic or political instability.

“Expats are often excluded from joining local ‘host’ pension schemes or it may be inadvisable for them to do so,” said Tony Broomhead, WTW’s managing director of integrated and global solutions, in a press release. “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.”

Employers are looking at setting up international pension or savings plans that can meet the fix multiple pension challenges within their businesses, he added, noting these plans can serve various expat groups. For example, foreign employees are excluded from local plans like the Central Provident Fund in Singapore.

“More recently, these plans can help meet [diversity, equity and inclusion] objectives, whereby plan sponsors are keen to be able to report that by including an [international pension plan] they are now able to offer access to a pension plan to all their global staff.”

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The survey also found environmental, social and governance considerations are an emerging focus for international pension and savings plans, with 163 plan sponsors indicating they reviewed their fund range in the past 12 months for ESG considerations, which includes DEI audits.

Among the plans offered to local employees in countries facing more challenging political and economic circumstances, Egypt was the most popular location, with 32 plans including Egypt-based savers. This was followed by Argentina (31 plans), Lebanon (28 plans), Sri Lanka (16 plans) and Ecuador (15 plans).

The vast majority (94 per cent) of all international pension and savings plans were defined contribution, with employer contribution rates typically ranging between 10 per cent and 14 per cent. In addition, 71 per cent of plans were established with a ‘retirement objective’ and 29 per cent with a shorter-term ‘savings objective.’

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