Demand for international pensions and savings vehicles is continuing to grow, beyond just expatriate communities, in order to protect local employee groups from increasing political and economic volatility, according to WTW.

WTW, a leading global advisory, broking, and solutions company, has launched its latest International Pension Plan Survey, which covers 1028 International Pension and Savings Plans (IPPs and ISPs) with a membership of over 200,000 employees in total. The report found that the number of IPPs and ISPs being offered in countries operating in challenging political or economic circumstances has risen from 54 five years ago, to 126 in 2024. This increase has been a consequence of economic challenges including rising inflation around the world and a higher-than-normal number of sovereign defaults – 18 in 10 countries since 2020 – that have made local pension and savings provision riskier for local employees in certain countries.

Employers are increasingly trying to reduce or remove these risks by providing more secure IPPs and ISPs, usually held in trust (64%) for additional security, in order to protect employees’ retirement pots and savings from localised instability. This is particularly important where local pensions are invested locally.

IPPs and ISPs can be used to provide a more secure vehicle and deliver better pension outcomes with access to global hard currency investment funds, reducing exposure to local high-risk markets.”

Michael Brough | Senior Director, WTW
Michael Brough, Senior Director, Integrated and Global Solutions, WTW, said: “Economic and political instability in many countries, along with rising inflation have created many challenges for employers looking to provide stable pension and savings arrangements for their employees around the world. IPPs and ISPs can be used to provide a more secure vehicle and deliver better pension outcomes with access to global hard currency investment funds, reducing exposure to local high-risk markets.”

Another increasing trend highlighted in WTW’s report shows the growing demand for Environmental, Social and Governance (ESG) investment options within the fund ranges offered by IPP and ISP providers. The report shows that while over half (58%) of IPPs and ISPs now offer ESG funds, this will further increase as plan sponsors interest in reviewing ESG fund ranges rises, with 9 out of 11 providers (82%) reporting an increase in switching to ESG funds.

In addition, the report also observed that there is a growing need for IPPs and ISPs to offer Shariah investment options following an increasing number of prospective members who were previously unable to participate, due to an absence of Shariah Funds.

“We have seen an increase in situations where prospective members of IPPs and ISPs have been unable to participate in plans, due to an absence of investment funds that meet their personal or religious principles,” said Brough. “This often focuses on Shariah and so there has been a rise in IPPs and ISPs incorporating more choices across broader Shariah asset classes, not just global equity funds. We expect this to continue to increase in popularity in the years ahead and is not just relevant to IPPs and ISPs, but domestic pensions globally as well.”

The WTW IPP Survey 2024 also found that:

While 56% of IPPs and ISPs operate globally, plans operated in Europe have seen the largest growth with the number of plans doubling in the last 10 years, now accounting for a quarter (26%) of all plans globally.
Of the 1 in 8 plans offered to local employees in countries facing challenging political and economic circumstances, Lebanon was the most popular location for such IPPs/ISPs with 35 plans operated (up from 28 in 2023).
There are estimated to be $19.5bn in IPP/ISP assets under Management globally, an increase of 33% since 2018.
Most plans (52%) have assets of less than $5m in total and only 1% of plans have assets over $250m.
About the survey
The WTW International Pension Plan Survey 2023 was conducted in H2 2023 and covers 1028 IPPs and ISPs sponsored by 960 companies. It is the 16th edition of the survey. Download a free copy at International Pension Plan Survey.

About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success.

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