Trust is Key for IPPs

Trust is Key for IPPs

On the face of it, saving for retirement appears straightforward – pick a retirement date, select a product and start saving.  Easy, right?

Actually, no – especially for international pension plans.  Retirement goals change over time and pensions are long term vehicles where security, stability and flexibility are primary watchwords.  For international organisations tasked with securing the financial future of their employees, this responsibility can weigh heavily.  Expatriates, and their advisers, face the same challenges when making individual personal retirement plans.

Thankfully, a trust-based pension in the Isle of Man is more than up to the task.

Generally, the Isle of Man’s legal system provides some highly valuable protection for trusts, including so-called ‘firewall’ provisions – which help to protect Isle of Man trustees from challenges arising from conflicting foreign laws – as well as highly-developed asset protection qualities.  More specifically, at an administrative level, Isle of Man providers have built considerable capability in structuring individual trusts with wide market appeal. 

The Master Trust, for example, is a well-trodden path – essentially a communal trust and rules which can be accessed by any number of individuals.  This is ideal for smaller employee groups because of the economies of scale, and therefore value for money, generated through mass membership.    And, while the scheme rules are common across members, they are generally drawn widely enough to suit the full range of international retirement planning needs.

Larger organisations may favour a Bespoke Trust over a Master Trust, enabling them to tailor the scheme rules (and adapt them if and when required) according the particular needs of the corporation and its employees.  Again, the Isle of Man’s pension providers have garnered enviable expertise in working with multi-nationals on these custom-built trusts.

There are some clear advantages of trust-based schemes when compared against a contract-based equivalent, in particular that the latter, generally, will not legally ring-fence member assets from a sponsoring employer as effectively.  Nor can it avail of the other asset protection qualities of a trust.  These governance considerations are core risk-management imperatives for employers, helping to explain why trusts are valued so highly and represent a significant share of this space.

Servicing the retirement needs of international clients demands a secure and stable environment combined with a flexible approach to pension fund accumulation and benefit delivery.  Isle of Man trusts deliver on all fronts.