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Survey Report

International Pension Plan Survey 2022

Retirement|Investments|Pension Board and Trustee Consulting|Pensions Corporate Consulting|Pensions Risk Solutions|Defined Contribution|
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By Michael Brough and Ashika Tailor | March 22, 2022

This year’s survey includes an overview of key trends, including ESG investment considerations, the sovereign debt crisis and the increased use of IPPs and ISPs for certain regions.

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About the survey

International Pension Plan Survey is an annual survey conducted by WTW in Q3 and Q4 2021, analysing International Pension Plan (IPP) and International Savings Plan (ISP) specific design elements and membership criteria. The survey this year covers 1,009 IPPs and ISPs sponsored by 951 companies. Total assets under management for all the IPPs and ISPs in this year’s survey is estimated to be around US$18.4 billion.

Most IPPs/ISPs are set up to provide savings or retirement benefits for expatriates who are not covered by any home country plans and/or not participating in a local host country retirement plan. Out of the total number of IPPs and ISPs in our survey, around 10% were set up in the last 3 years, with 16 plans set up in 2021. IPPs/ISPs are being set up for multiple purposes and we expect this trend to continue, leading to more diverse memberships in the future.

As in prior years, the overall objective of the majority of plans is to provide income at retirement (Figure 1).

Graphic showing that 70% of objectives are for retirement and 30% for savings accessibility requirements.
Figure 1. Plan objectives

Around half of IPPs and ISPs in our survey offer up to 10 investment funds for members to choose from. ESG is an emerging focus for IPPs and ISPs, with 166 plans indicating they have reviewed the fund range in the past 12 months for ESG considerations.

Overall results

icone1-industry
Industry sectors

The largest concentration sponsoring IPPs/ISPs continues to be from Banking and Finance, followed by Oil and Gas, and Consumer Goods and Retail.

icone2-Market Size
Market size

The total assets under management for these plans grew by 7%, and are estimated to be around US$18.4 billion, compared with US$17.2 billion in last year’s survey. The IPPs/ISPs in our survey have a total membership that ranges from fewer than 10 members to up to 19,000 members spread across the globe.

icone3-Vesting Period
Vesting period

Three-quarters of IPPs and ISPs in our survey offer immediate vesting, even though incorporating vesting criteria into the IPP/ISP design can encourage employee retention. Where vesting rules do exist, a phased vesting schedule is slightly more popular than a flat vesting schedule.

icone4-Design Features
Design features

Defined contribution (DC) plans remain the most prevalent design basis, with defined benefit (DB) plans still in operation but typically closed to new members and falling in numbers.

icone5-Fund Managment
Fund management

The number of IPPs and ISPs that offer access to external fund managers (as opposed to internal funds only, which are typically limited to the provider’s proprietary investments) increased from last year’s survey and continue to be the most popular offerings.

icone6-Distribution
Distribution options

Lump sum payments (55% of responses) continue to be the most popular form of distribution, though 39% now also allow members to choose between a lump sum and drawdown, which was not really offered 10 years ago.

icone7-Tech-and-AI
Technology and artificial intelligence

Providers continue to invest in technology to improve administration platforms and enhance the member experience, for example through the use of mobile apps. Financial wellbeing services are increasingly being offered by providers to maintain and accumulate assets in the future.

icone8-Plan-Vehicle
Plan vehicle

Trust-based vehicles continue to be the most popular way to segregate and protect member assets. Contract-based plans are also common, which may be due to the historic cost of trust provision as well as a general aversion to trusts in certain regions, such as the Channel Islands. For contract-based arrangements, Luxembourg is the most common domicile.

icone9-Lifestyle
Lifestyle strategies

Lifestyle strategies or funds continue to feature in the investment offering, where 17% of those surveyed offer one lifestyle option, and 32% of IPPs and ISPs offer more than one lifestyle option to provide for different membership demographics, risk profiles or currencies.

icone10-Investment
Investment funds

Around half of IPPs and ISPs in our survey offer up to 10 investment funds for members to choose from. The remainder offer in excess of 10 investment options, with a significant number offering over 40 different investment funds.

For more detailed findings, please complete the form on the right to access the full 23-page report.

Authors

Senior Director, Integrated & Global Solutions

Director, Integrated & Global Solutions

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