Demand for international pensions and savings vehicles is growing beyond expatriate communities, according to data analysts WTW.

It said the number of international pension and savings plans (IPPs and ISPs) being offered in countries in turmoil, such as the Lebanon, has more than doubled in the last five years.

WTW’s latest International Pension Plan Survey covered 1,028 IPPs and ISPs with a membership of more than 200,000 employees.

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.

The firm said the increase was a consequence of economic challenges, including rising inflation around the world and a higher-than-normal number of sovereign defaults. There have been 18 sovereign defaults in 10 countries since 2020.

That has made local pension and savings provision riskier for local employees in certain countries.

Employers have been trying to reduce the risks by providing more secure IPPs and ISPs, usually held in trust (64%) for additional security, to protect employees’ retirement pots and savings from localised instability. That is particularly important where local pensions are invested locally, said 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 the report was the growing demand for environmental, social and governance (ESG) investment options. While more than half (58%) of IPPs and ISPs offer ESG funds, the number will 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. 

On top of that, the report showed 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 (Islamic compliant funds).

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 one in eight 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 (£15.54bn) in IPP/ISP assets under management globally, an increase of 33% since 2018.
• Most plans (52%) have assets of less than $5m (£3.98m) in total and only 1% of plans have assets more than $250m (£199m).

• The WTW International Pension Plan Survey 2023 was conducted in H2 2023 and covered 1,028 IPPs and ISPs sponsored by 960 companies. It is the 16th edition of the survey.