International Pension Plans (IPPs) and International Savings Plans (ISPs) for multinational corporates
Sovereign is uniquely placed to provide international pension and savings plans for multinational employers, with regulated pension licensees in multiple jurisdictions, including the two most widely used jurisdictions for such arrangements, Guernsey and the Isle of Man.
Sovereign provides affordable, streamlined and tax efficient solutions from both Guernsey and the Isle of Man to suit the specific requirements of an employer, regardless of their size and the jurisdictions in which they operate and in which their employees are situated.
Sovereign is able to provide solutions for new international pensions and savings plans, or to takeover legacy plans for efficiency, cost, service and/or consolidation purposes.
In addition to Guernsey and the Isle of Man, Sovereign also has a regulated pension licensee in the United Kingdom and can therefore provide an ‘all-inclusive’ solution for multinational corporates who have a combination of onshore (i.e. Section 615) and offshore pension schemes for their UK expatriate workforce.
What is an IPP?
International Pension Plans are single, centralised pension arrangements setup and managed from a jurisdiction such as Guernsey or the Isle of Man.
IPPs are typically utilised by multinational employers who wish to provide relevant employees with a retirement plan as part of their overall benefits package. Relevant employees can include highly transient employees who move between countries, or longer term expatriate employees operating outside of their home country.
IPPs are also utilised by employers who have populations of employees located in countries where there is no recognised pension framework, including developing countries and emerging markets.
An IPP is a recognised pension plan and as such it would typically have certain relevant features that would be associated with a pension, most notably a minimum retirement age before which members of the plan would be unable to withdraw their pension funds, unless as a result of certain specified events (i.e. serious ill health).
IPPs are generally flexible enough that members upon reaching minimum retirement age can choose how they wish to receive their benefits and this would include a one off lump sum payment.
IPPs setup and managed from Guernsey and the Isle of Man both benefit from being able to make payments to non-resident members without the deduction of any local withholding taxes, resulting in a tax-exempt pension whereby members sole consideration for tax liability will be in their country of tax residence at the time of receipt, i.e. no double taxation.
What is an ISP?
International Savings Plans (sometimes referred to as gratuity schemes) are single centralised savings arrangements setup and managed from a jurisdiction such as Guernsey or the Isle of Man.
ISPs are typically utilised by multinational employers who wish to provide relevant employees with a savings plan as part of their overall benefits package. Relevant employees can include highly transient employees who move between countries or longer term expatriate employees operating outside of their home country.
ISPs are also utilised by employers who have populations of employees located in countries where there is no recognised pension framework, including developing countries and emerging markets.
An ISP will have certain rules that determine how and when an employee is eligible to take benefits from the plan and this would typically include entitlement on certain events, such as leaving service or achieving a certain number of years with the company etc.
ISPs are generally flexible enough that members can choose how they wish to receive their benefits, although this would typically be by way of a one off lump sum payment.
ISPs setup and managed from Guernsey and the Isle of Man both benefit from being able to make payments to non-resident members without the deduction of any local withholding taxes, resulting in a tax-exempt savings plan whereby members sole consideration for tax liability will be in their country of tax residence at the time of receipt, i.e. no double taxation.
Sovereign has developed multi-employer solutions that allow for cost and operational efficiency, however it is also possible to setup a bespoke arrangement to specifically cater to the unique needs and requirements of an individual employer.
IPPs and ISPs setup and managed from Guernsey and the Isle of Man also benefit from a dedicated regulatory framework ensuring the highest levels of security, governance and supervision.
For more information, contact your local Sovereign representative or Sean Gillease, Business Development Manager for Sovereign Trust (Channel Islands) Limited by email or call +44 (0) 1481 742229
Sovereign Trust (Channel Islands) Limited and Sovereign Trust (Guernsey) Limited are regulated by the Guernsey Financial Services Commission and licensed in respect of the formation, management and administration of pension schemes.
