International Pension and Savings Plan Markets Continue to Expand

ARLINGTON, Va., March 03, 2016 (GLOBE NEWSWIRE) -- Twenty-three new international pension and savings plans (IPPs and ISPs) were established in 2015, according to a Willis Towers Watson (NASDAQ:WLTW) survey. The research, now in its eighth year and covering 721 plans sponsored by 638 companies, also indicates companies are using IPPs or ISPs to extend coverage for retirement savings participation to employees in countries where local solutions are unavailable or inadequate. With 30% of all IPPs/ISPs being set up in the last four years, they continue to grow in popularity.

“The main strategic intent of the IPPs/ISPs continues to be providing savings or retirement benefits for expatriates, who are often not covered by any home country plans nor participating in a local host country savings or retirement plan,” said Brian Makuck, North America Intellectual Capital and Integration lead for the Multinational practice, Willis Towers Watson. “However, the vehicle is now also used to deliver pensions and long-term savings to local employee groups in different international locations, such as markets without infrastructure to support a pension offering, or in countries suffering from economic or political uncertainty.”

A key driver for this trend is the sponsoring employer’s desire to limit the impacts on employees of potential local losses, e.g., due to defaults. This not only protects the assets underlying employees’ savings, but also reduces the risk of the employer having to pay a second round of contributions to make up for fund losses. Other factors fueling the trend include use of savings in hard currencies to protect against dramatic devaluations, and the substantial differences in administration and communication capabilities offered by IPP/ISP providers compared to local providers in developing markets.

The research also shows investment fund options offered by IPPs/ISPs continue to increase in number and sophistication, due to the diverse demographics and varied currency preferences of members. The survey found 41% of IPPs/ISPs offer over 10 investment funds for members to choose from, with as many as 6% providing over 40 different funds. Automated de-risking “lifestyle” strategies and funds also continue to increase in popularity, with 38% of plans now offering at least one lifestyle option to members.

“IPPs and ISPs often cater to a much broader range of members than domestic plans, due to the numbers of territories and nationalities involved; therefore, their members typically demand a greater number and range of investment fund options compared to members of domestic plans,” said Makuck. “At the same time, employers are taking measures to decrease the number of investment funds and offer an appropriate selection of investment options in order to reduce complexity for members.”

When IPP/ISP members reach retirement or leave the employer sponsoring the plan, the survey found, over two-thirds (68%) of IPPs/ISPs provide distribution as a cash lump sum only. However, there’s a growing trend, particularly for plans set up since 2006, to offer the additional choice of a drawdown arrangement, now offered by over a quarter (28%) of IPPs/ISPs.

“While lump sums remain the most common distribution option, we are seeing more IPPs/ISPs offering a choice between a lump sum and an internal annuity or drawdown,” said Makuck. “Drawdown can provide tax advantages for certain individuals drawing benefits from IPPs due to local personal allowances, and this option has become more common among IPPs set up in the past five years.”

Notes to editors

The 2015 Willis Towers Watson International Pension Plan Survey includes 721 IPPs sponsored by 638 companies. Participants include large and midsize multinational employers across a variety of industry sectors that employ expatriate and local workforces participating in IPPs ranging from less than 10 members to nearly 30,000. The survey includes data on IPP membership criteria (plan size and location), plan design (such as defined contribution, defined benefit or hybrid plans), funding, vesting criteria, vehicle, employer and employee contribution amounts, investment funds and retirement distribution options. The 2015 Willis Towers Watson International Pension Plan Survey can be found on

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Source:Willis Towers Watson Public Limited Company