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WTW: Cross-border pensions and savings vehicles are growing in popularity among multi-national companies
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WTW: Cross-border pensions and savings vehicles are growing in popularity among multi-national companies

Cross-border pensions and savings vehicles are growing in popularity among multi-national companies, according to research by Willis Towers Watson (WTW).

The consultancy giant has seen a growth in interest in flexible, multi-jurisdictional savings vehicles from multi-nationals after it surveyed 932 international pension plans (IPPs) and international savings plans (ISPs), set up to cater for expats, executives and other staff working in several different countries.

Assets under management across the surveyed plans reached $15.8bn (£12.1bn) in 2019, up from $14.7bn in 2018.

WTW global services and solutions group senior director Michael Brough said further growth was expected in 2020 as companies sought to attract, retain and reward talent across multiple jurisdictions.

IPPs and ISPs were particularly of interest to companies with staff in economically unstable countries, Brough said, where investing in local products and assets could pose a risk to individuals' investments.

The report found that IPPs and ISPs were particularly popular in Argentina, with 28 plans including Argentina-based savers. The country's government is struggling to repay debtholders and agreed to a $57bn financing package from the International Monetary Fund in 2018.

Brough said: "In other locations, where there are large expatriate populations, such as Singapore, IPPs are also growing for expatriate groups excluded from the local host pension system, and who may also be unable to be maintained in their home system.

"In such cases, employers need to figure out ways to provide pensions and savings benefits, and IPPs are proving popular."

A number of large companies in Singapore set up IPPs or ISPs in 2018 and 2019, WTW reported, as overseas staff are not permitted to join the country's Central Provident Fund.

Brough said he expected demand for new plans to come from the Middle East, as well as "parts of economically stressed Latin America, Europe, and Asia".

The report highlighted recent regulatory changes in Dubai's International Financial Centre (DIFC), requiring all employers to offer a workplace savings plan from 1 February 2020. While there is a default savings vehicle, the DIFC Employee Workplace Savings Plan, WTW said authorities were likely to approve alternative arrangements as well.

The consultancy reported a "surge in interest" from companies based in the DIFC wanting to set up plans that are cheaper and more flexible.

 

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