An IPP is a single plan that can be offered to the employees of global organisations, irrespective of where they are based, allowing for regular and consistent contributions, and which may be simpler and potentially more cost effective to administer and monitor than running several separate plans across different jurisdictions.
IPPs can be:
- Set up as defined contribution, defined benefit, or hybrid schemes, although the majority are defined contribution
- Funded or unfunded, although most are funded
- Trust or contract based, although most are trust based, contract based schemes are increasing
They can provide both ongoing pension and/or lump sum benefits. A 2012 study indicated that nearly 60% of IPPs provided lump sum benefits only.
How could it help my company?
International companies are employing more long-term expatriates than ever before, so providing suitable and attractive benefits for these globally mobile employees is becoming increasingly important. In addition to potentially being a cost-effective alternative to providing multiple pension plans across several countries, IPPs may assist in attracting, rewarding and retaining senior executives of international companies, internationally mobile employees, and management working outside their country of origin.
Additionally, IPPs are typically established in offshore jurisdictions and therefore may benefit from advantageous taxation or institutional investment fund charges.
Occasionally local workforces may also be allowed to join an IPP, particularly in countries where pensions offerings are limited, they have limited tax advantages or are controlled by a restrictive regime of investment.