Cross-border pension plan assets increase by €1bn over year – WTW

Assets under management (AUM) in cross-border pension plans increased by USD 1.1bn (€1bn) from 2018 to 2019, according to Willis Towers Watson (WTW).

Its latest International Pension Plan Survey, which includes 932 international pension and savings plans (IPPs and ISPs) sponsored by 877 companies, found that AUM rose to €14.6bn (USD 15.8bn) from €13.6bn (USD 14.7bn).

IPPs and ISPs established in the 20th century were originally aimed at expats, particularly senior executive ‘global nomads’, who may have spent their careers in many different countries and were unable to be maintained in home country arrangements or to join host country plans. More recently the popularity of IPPs and ISPs has been driven by the needs of local expats (foreigners employed under a local contract) and other diverse and often complex employee groups.

Commenting, WTW senior director – global services and solutions group, Michael Brough, said: “The growth in IPPs and ISPs has continued apace, as their appeal widens beyond the traditional senior executive global expatriate. We expect stronger interest in 2020 as companies explore the flexibility of these vehicles in their global struggles to attract and retain the best talent.”

WTW believes demand in 2020 will be further driven by companies’ desire to attract or retain local staff in countries that are economically unstable, or where no local pension system exists.

“Looking forward into 2020 and beyond there is likely to be growth in IPPs and ISPs for a range of different eligibility groups, and not just expatriates. We anticipate strong interest in many markets, including the DIFC and possibly other Middle Eastern locations, and parts of economically stressed Latin America, Europe, and Asia. Demand is also coming from both non-governmental and inter-governmental organisations (NGOs and IGOs), driven by their need to offer defined contribution (DC) pension plans, and also by their special status and cross border nature,” Brough said.

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