About Pension Services
Companies operating in the Middle East are usually obliged to offer their staff an ‘end of service gratuity’ payment when they leave the company. The level of gratuity is based on the individual’s salary and length of service and is payable as a lump sum. Gratuity rules and terminology vary around the Gulf Cooperation Council (GCC) region but generally operate in a similar fashion.
Where employers do not invest or plan for their end of service gratuity obligations, they may experience cash flow problems if staff turnover is higher than anticipated or if the business lacks liquidity at the time of payment.
Sovereign’s Gratuity Offset option allows the sponsoring employer to save towards their end of service gratuity liability through an employee benefit plan. Over the longer term this provides a more efficient means of funding gratuity liabilities. It should be noted that this structure does not remove the employer’s end of service gratuity obligation, but it does provide a formal and efficient means of funding the liability.
Companies are employing more long-term expatriates than ever before. Often these internationally mobile employees are experienced, senior and highly qualified individuals, who may have more specific employee benefit requirements.
Sovereign offers a number of individual solutions in cases where there is no suitable home or host-country retirement plan. International Personal Retirement Plans offer a single plan to employees, irrespective of where they are based, allowing for regular, consistent contributions.
Portable IRPs can be set up on an individual or group basis. These trust-based solutions are ideal for the internationally mobile employee and permit investment into more esoteric assets alongside conventional investment funds.
Companies can also take advantage of the flexibility of IRPs to top up existing retirement savings, particularly for senior employees or for expatriates working in locations where retirement plans are mandatory and benefits may be lower than any home-country plan.
By implementing an IRPs, an individual’s retirement benefit accumulation can be protected from any negative impacts of their assignment. Group IRPs help to create a globally attractive and competitive benefits package that can be simpler to administer and monitor than multiple plans.
For further information on our Retirement Planning solutions click here.