Employers Stuck on Expat Benefits

Expat Globe

The increasing practice of expats being sent between several countries for their jobs has left employers in a difficult position when providing benefits.

Complications arise for mobile expats as it is difficult to put them into a pension scheme if they don’t know where they will retire whilst health insurance needs to be available cross-country.

Mark Price, principal of the international consulting group at Mercer described mobile expats in a press release as “increasingly vital” but acknowledged the complications they face with regard to these benefits.

The international consulting group at Mercer carried out a study of the benefits offered by 288 multinational companies. They found that the number of expats living a nomadic existence had increased from six to ten per cent since 2008/09. In this period, the number of ‘long term’ expats nearly doubled to 40% whilst the number of ‘short term’ expats fell from 17% to 11% due to the increase in the mobile workers.

The research found that nearly a quarter of the companies had no standardised policy for these expats or had no policy at all for them.

Some of the companies did provide offshore retirement schemes that weren’t attached to a particular country although over a third claimed that there were not enough of these people to justify the cost of the scheme. 17% of the companies did not even consider the plans.

Mark Price commented that, “Offshore plans may not address all concerns, such as taxation or facilitating exclusion from host country pension arrangements, depending on the jurisdictions concerned, but do go some way to allowing for continued pension plan membership under a single arrangement whilst employees are on various assignments.”

The percentage of companies who did provide this is 12%, which “appears low” according to Price. However, he said it was “indicative of the market and we’re actually seeing an increase in the use of such vehicles outside Asia Pacific.”

This latest set of research confirms the findings of previous studies which focus on the growing number of ‘commuter expats’ who maintain a permanent residence in the U.K whilst continuing to stay and work abroad.

Expats are reminded to always consult an expat focussed IFA before making any personal finance decisions.