By Dan Berman
The use of international pension plans to cover expatriates and other companies unable to participate in their home country retirement plans continued to grow in 2013, according to a Towers Watson survey.
“We are seeing more companies using their IPPs as a savings vehicle
instead of a longer-term retirement plan and have noticed an increase in the number of companies favoring an [international savings plan] approach,” said Michael Broomhead, director of international consulting services at Towers Watson, in a statement. “This is particularly evident in the Middle East and Latin America for local employee groups.”
The survey found a 10 percent increase in such plans over 2012 among 406 midsize and large multinational companies, which offer a total of 438 plans. The companies represented a broad cross section of sectors with banking and finance employers most likely to offer the pension plans
, making up 17 percent of the total. The industrial and oil and gas sectors each came in at 10 percent.
Expats made up 49 percent of those who were offered the plans. Towers Watson noted that in recent years more employers have allowed local workers to join.
Nearly 90 percent of plans are set up on the defined contribution model, with 59 percent featuring immediate vesting for participants.
Most plans, 61 percent, distribute the funds only as a lump sum, while 38 percent offer annuity and lump sum options.
“Companies aspire to an increasingly mobile workforce, which brings the challenge of providing highly effective benefits,” Broomhead said. “When there is no host country plan or this plan is inadequate, expatriates can easily end up with a shortfall in their retirement savings
Originally published on BenefitsPro.com