Expatriates biggest losers in pensions shake-up

Final
salary provision for expatriate employees has almost halved over the last
decade, new research has found.

A
survey by William M. Mercer shows that between 1991 and 2001 the number of
organisations offering final salary schemes has dropped from 79 per cent to 42
per cent.

The
survey of 133 companies, covering over 27,500 expatriate staff, found that just
over half used special retirement plans for employees with longer-term
postings. This was mainly due to the legal and tax difficulties associated with
staff on this type of assignment.

Paul
Kelly, worldwide partner at Mercer, claimed the survey identified a change in
remuneration for expatriates:

“The
results show that the shift from final salary pensions has already had a major
impact on expatriate staff. They can be a big expense on the company and moving
to defined contribution plans is one way of controlling company costs,” he
said.

Almost
every firm had some level of medical care for staff working overseas, with
International medical policies proving the most popular – up by 24 per cent in
the last 10 years.

Emergency
assistance is a common expatriate benefit especially in high-risk countries –
85 per cent of companies offer this service to staff overseas, with provisions
ranging from finding a local doctor to an all-out emergency evacuation.

If
things do go drastically wrong the long-term disability benefit provided by
most firms equate to 60 per cent of salary.

European
companies tend to offer more generous plans than US firms, but contribution
rates tend to be higher as pensions represent a larger proportion of the total
remuneration package.

www.imercer.com/international

By Ross Wigham

Comments are closed.