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Growth of international pension plans continues apace

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  • Growth of international pension plans continues apace

GLOBAL – The growth of international pension plans (IPPs) continues apace, according to a study by Towers Watson.

A survey by the consultancy found that multinational companies set up 33 new IPPs in 2012, increasing 2011's total of 370 to 403.

Its fifth International Pension Plan survey also found that IPPs were being developed within multi-country pension frameworks, including pan-European structures known as institutions for occupational retirement provision, or IORPs.

A report on cross-border IORP activity conducted by the European Insurance and Occupational Pension Authority (EIOPA) last year, however, showed no change in the number of listings being reported.

While six new cross-border vehicles were registered in Europe between June 2011 and June 2012, the same number of IORPs terminated their cross-border arrangements over the period, which means the overall number of existing IORPs remained at 84.

Michael Brough, senior consultant at Towers Watson, said the increasing number of companies offering IPP plans for international or expatriate employees had driven growth in the IPP market.  

"We also see more multinationals extending the eligibility of existing IPPs to allow local workforces to join, where possible," he said.

"This illustrates the continuing trend for these vehicles to be set up where local alternative arrangements are inadequate or absent.

Towers Watson said multinationals were using "creative ways" to include multiple groups into a single pension structure, enabling them to use "a single administrator, a single investment platform and a single governance framework".

It also found that funded defined contribution plans remained the most prevalent design for IPPs, with defined benefit (DB) plans still in operation but typically closed to new members.

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