International retirement savings plans (IRSPs) are becoming an increasingly popular option amongst employers, but continue to rank low among the benefits most valued by international staff, according to research from Aon.

The study found that fewer than a quarter (24 per cent) of employers surveyed currently provide a retirement or savings plan for their international assignees.

Of those, the vast majority (84 per cent) are based on a defined contribution structure, reflecting broader industry trends.

Despite relatively low uptake, Aon argued that international retirement savings plans are gaining ground as employers look to offer a consistent and trusted global savings solution.

There are now more than 1,000 such plans worldwide, representing USD 20bn in total assets, with 150 new plans launched in the past five years.

There are particular instances where IRSPs can prove especially helpful, as Aon pointed out that in some countries, expatriates are unable to participate in local retirement arrangements, while others face economic or political instability or have underdeveloped pension markets, which can make local host-country options unattractive.

In such cases, an international retirement savings plan can provide a valuable opportunity for employees to save for their future in a trusted, low-cost employer plan that invests in quality funds and stable currencies.

The group suggested that IRSPs are also well-suited to address the challenges faced by employers for retirement and saving plans, administrative complexity, and regulatory issues.

Indeed, Aon found that portability and flexibility are key priorities for employers, with 38 per cent highlighting flexibility as the key priority when selecting a retirement savings plan for staff, while 44 per cent selected portability, and less than a fifth opted for investment options.

Aon pointed out that, as a result, many IRSP providers are continuing to enhance their offerings to support employers and streamline the administration
process as much as possible, using, for instance, automation and the ability to accept contributions in multiple currencies.

From a compliance standpoint, Aon said that IRSPs can also ease the employer’s burden to comply with potentially complex local pension legislation, particularly in countries where there is no on-the-ground HR presence.

"Retirement savings/pensions are a benefit worth considering to ensure that a full benefit package is offered to mobile employees," it stated.

"Allowing asset portability is essential for a workforce that may move around the globe in the future."

Staff appreciation for global pension offerings may not be there yet, however, as whilst pensions ranked firmly among the top five most valued benefits by employees in Aon's previous research, this was not the case for international employees, with pensions and savings arrangements falling outside the top five most valued benefits

Aon highlighted this as an indicator that employers still have work to do to help international staff recognise the importance and long-term value of these plans and the importance of saving for retirement.

Other companies are opting for other saving options, as among companies that do not currently provide a retirement savings plan, 18 per cent said they offer a cash benefit instead.

However, Aon warned that these employees are not offered any kind of structured investment program, and there is no governance around how that money is being invested by the employee.

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