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Global HR News
International Mobile Employees
Pension Needs and Solutions
Rüdiger Blaich, Regional Sales Director, AEGON Global Pensions, D
Paris, France
8 December 2009
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CONTENT
1. Introduction: global pension issues
2. Development of mobile workforce
3. Pension needs of mobile workforce
4. Our solution
5. Client cases
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Introduction
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Ageing population
Does anybody assume that there is growth in
the World?
Each day World population increases by 170,000!
Generation “65 plus” in % in 2000
and until 2030 –20 years from now?
6%
raising to 12%!
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How did the number of Expatriates
develop over the past 3 years?
• Increase by 90% over last 3 years
• 47% of companies increased traditional expats (1-5 yrs)
• 38 % increased “international nomads”
(due to recent Mercer study 2008/2009)
Do you know how “your mobile
workforce” will be able to retire?
Take the time now to act
before you will be forced to do so!
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Pensions for local employees in the World
It is a worldwide challenge:
Growing World Population in
age groups
We die later (live longer)
We have fewer children and
are getting older!
Reached the peak
right now!
Life expectancy at birth
90.0
Austr
ia
85.0
Czec
h R.
Fran
ce
Age
80.0
In 40 years:
2.8 billion more people =
170,000 per day that did not die !
Germ
any
75.0
Hung
ary
Italy
70.0
Japa
n
65.0
Neth
erlan
ds
60.0
1950-1955
1980-1985
2000-2005
2020-2025
2045-2050
Time
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State Pensions still dominate old-age
income in Europe
The challenge:
World Bank 3-pillar-system
Dependency ratios for 1st pillar
are increasing in all countries!
Pension system
(World Bank model)
I.
State
pension
II.
Occupational
pension
III.
Private
pension
Source AEGON Global Pensions
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Pension systems for local
employees are nowhere sustainable
Many expatriates don’t fulfil minimum
conditions in their host or / and home
countries.
First pillar is much lower than with
competitive local workforce!
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Development of mobile
workforce
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Globalization
More People have no more a home location.
Local pension provision often unmanageable.
Reasons to opt for an International Retirement Plan
Recruitment and retention
Lack of home/host country provisions
Top-up provision for key expats
Cost efficiency and governance
Source: Mercer, 2008/2009 Benefits Survey for Expatriates and Globally Mobile Employees
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Location of multinational companies
F+UK+D+NL+CH = 55% (80% of Europe based)
+ US = 87%
6%
7%
5%
32%
10%
12%
17%
11%
US
UK
Fr
Ge
NL
SWI
JPN
Rest
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International assignments in today’s world
Studies from Mercer, Ernst & Young, PWC have shown:
The Number of Mobile Workforce is increasing
There is a need for better governance in most companies
There is a need for higher Flexibility, Control and Security
Pension are the most challenging topic amongst
International Human Resources Departments*.
40% of companies finds pension challenging
28% of companies finds pensions very challenging
Source: Ernst & Young, 2009, Switzerland, Global Mobility Effectiveness Survey
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Who is willing to think about income in
retirement in 20 or 30 years time?
Many individuals have no experience in planning for their
retirement and the first pillar provision for retirement
pensions is very often very limited.
“International Nomads” need
additional pensions!
Mobile workers have to concentrate on new environment: culture,
language, responsibilities.
Limited time for their own issues!
So for Expats the challenge is even bigger!
It is the need that companies help!
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Pension needs of mobile
workforce
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International Retirement Plan: for whom and why?
For employers that need skilled staff in different places :
• Multinational companies, International organisations, Non
Governmental Organisations
• No local satisfactory solution in host country
• No option to keep contributing to home country plans
 focus now is mainly on long term mobile employees
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Grouping of personnel
“Global
Nomads”
(international plan)
Permanent Moves
(plan host country)
Limited duration assignments
(plan home country)
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International Mobile Employees
Mobile employees
1. Expatriats
2. Third Country Nationals
3. Foreign nationals
not able to participate in domestic
schemes
Special needs
1. Transfer of assets anytime, multi-currency, multi-lingual
2. Key Personnel, good pension provision (DB or DC),
additional employee contribution
3. Flexible, Straightforward and Secure Retirement Provision
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Our solution
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Selection criteria – Expat provider
The ideal features of an IPP are:
1. Plan design: Flexible, cost-effective and customized to meet the
needs of the company and members
2. Administration: Customer service oriented, secure and
accessible systems
3. Investment funds: Wide range of international investment funds
across asset classes, Open Architecture
4. Trust services: Plan assets separated from company assets (if
not using an insured contract)
5. Governance: Effective risk management, documented
processes and controls, and clear roles and responsibilities
6. Communication: Easily understood by employees, allowing
them to appreciate the benefits offered
International pension plans: Selecting a provider
Last updated: 5 March 2009 (Mercer)
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International plan features
Multi lingual
Multi currency
Tax free capital growth
Investor protection
Flexibility of plan design
Open architecture
Online support
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International Retirement Plan
Insured, bundled, multi-currency retirement plan
Competitively priced
Investment solutions
6 risk profiles in 3 currencies
Guaranteed fund
Investment choice
Use an asset manager selected by La Mondiale
La Mondiale Europartner platform: over 1,000 funds
Governed by Luxembourg legislation
Tax-free accumulation of contributions
Investor confidentiality, protection and security
Online support
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Why Luxembourg?
Leading financial center for mutual funds
Tax free growth
No withholding tax
No tax on capital gains
Maximum investor protection
Under supervision of the supervisory authority for the
insurance sector “Commissariat aux Assurances”
100% assets deposited with Custodian Bank
Professional secrecy a legal requirement
EU regulated
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Online support
View the latest available valuation
Set & view previous account statement
periods
See performance of your portfolio
View all account transactions
Create account documents in Excel or PDF
Print transaction confirmation documents
Test risk assessment profiling tool
On-line active switching foreseen for 2010
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Online support
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Risk profiles
Management
profiles
EUR / USD / GBP
Short term
Number of years
remaining until
retirement age
Less than 4 years
Medium term
LMEP guaranteed
funds
(EUR/GBP/USD)
Russell
Bonds
Equity
100%
--
--
From 4 to 8 years
20%
50%
30%
Medium long term
From 9 to 12 years
--
60%
40%
Long term
From 13 to 16 years
--
45%
55%
Very long term
Maximum term
From 17 to 20 years
More than 21 years
---
20%
--
80%
100%
Life style approach, less risk, more bonds when closer to
pension
Freedom to switch between profiles
Profiles can be tailored
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La Mondiale Europartner
Established in Luxembourg 1989
Part of La Mondiale & AEGON insurance groups
6000+ high net worth clients
65 group pension schemes covering 3500 employees
92 multi-lingual staff based in Luxembourg
Client servicing teams assigned per client
Authorised to transact business in the EU directly or via a
trust if policyholder resides outside of EU
Transparent charging structure, offering multi-currency
investment solutions
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Client cases
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Client cases
European Commission
Michelin
ITER
BHP Billiton
NATIXIS
SeaBird
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Case study
The client is a leading international construction company employing more
than 30,000 people worldwide.
Challenge
Solution
As a global employer, the
company wanted to find an
effective funded long-term
retirement and savings
solution for several
hundred key expatriate
and local national
employees.
AEGON Global Pensions
provided the company with
a specially tailored
International Retirement
Plan, delivered by La
Mondiale Europartner in
Luxembourg.
Benefits
• Highly flexible
• Secure online access
• Reduced cost
• Easier to manage
• Multilingual support
• Excellent service
AEGON Global Pensions provided a highly flexible, retirement plan at
a cost that was comparable with the company’s domestic pension
arrangements.
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Summary
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Proposition International Retirement Plan
“Next Practice”
• Benefits: multi-lingual, multi-currency, insured retirement plan
• International Mobile Employees of MNC’s and NGO’s
• Start immediately: Insurance contract, ready and available
• Flexible platform: Default 6 risk profiles and a Guaranteed
Fund in 3 currencies, for major clients selection of over 1.000
funds
• Solid investment solution: governed by Luxembourg
legislation, investor confidentiality, protection and security
• Grow with the client: plans from 5 members till unlimited
• Online support: Ready for the future from consultation and
illustration purposes till active switching as from 2010.
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What you should remember:
“Next Practice”
HR Directors deal regarding their expatriates on “3 Rs”:
Recruit
Retain
Repatriate
There is a need to adding two more „Rs“:
•
Retire
• Rüdiger
;-)
For long–term expatriates you need to implement a pension plan –
and if you need help: call me! ;-)
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Thank you
AGP
[email protected]
+49 7141 648 39 80
Erich-Schmid-Str.13
71638 Ludwigsburg
Germany
This presentation contains general information only and does not
constitute a solicitation or offer. No rights can be derived from this
presentation. Please be advised that any fees, performance and/or
cost indications in this presentation are for information purposes only.
AEGON Global Pensions, its members and any of their affiliates or
employees do not guarantee, warrant or represent the accuracy or
completeness of the information contained in this presentation.
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