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Explored: International Savings Plans (ISPs)

Explored: International Savings Plans (ISPs)

Launched in Jersey on 1st January 2019, the International Savings Plan (ISP) vehicle is a strong addition to the employee benefits market, serving multinational and international companies wishing to establish a flexible savings arrangement.

What is an ISP?

An ISP is a trust structure established in Jersey which is required to meet the following criteria:

  • its sole purpose must be to benefit employees resident outside of Jersey;
  • the trust must be irrevocable;
  • it must have trustees (either two or more individuals or a corporate) who are regulated by the Jersey Financial Services Commission; and
  • it is not a scheme which comes within the pensions framework under Jersey tax legislation.

Benefits of the ISP

The ISP is a great benefit to those companies wishing to encourage their employees to save for the future. An ISP can be adapted to meet the needs and requirements of employers looking to introduce a company sponsored employee benefit.

The ISP is be particularly attractive to employers:

  • with globally mobile employees;
  • situated in the Middle East requiring assistance with their End Of Service Indemnity obligations; and
  • employees wishing to acquire shares in their employer, using the ISP as a savings structure to do so.

The flexibility of the ISP removes constraints of traditional pension plans or the existing employee incentive arrangements by combining the most effective elements of both. For example, an ISP will enable employees to draw upon the benefits at the end of their employment or other wide ranging circumstances or life changing events such as changing jobs, redundancy, ill-health or divorce.

Implementing ISPs

End-of-service gratuity payments are particularly common in the United Arab Emirates (UAE), with a study from financial services companies Old Mutual International and Quilter Cheviot revealing that 59 per cent of UAE residents depend on the payment to fund their retirement. However, as of 1 February 2020, new employment regulations and employment law changes in the Dubai International Finance Centre (DIFC) form part of the newly introduced DIFC Employee Workplace Savings (DEWS) scheme that replaces end-of-service benefits. The regime means employers in the DIFC and Gulf region will have more flexibility and options available to them regarding the provision of defined benefit or defined contribution schemes for employees.

One of those options is an ISP. To put them into context, let's examine a typical ISP scenario:

  An ISP in practise
 

X company is a large multinational company with offices in Dubai, Frankfurt and Paris, employing over 2,000 people. X company is required by UAE law to provide an end of service benefit payment (EoSB) to its Dubai employees, due on termination of employment. To facilitate this, X company establishes an ISP using a Jersey-based firm.

Due to the flexibility of Jersey ISPs, X company can tailor the ISP to suit the needs of its employees, allowing employees to take out their EoSB payment prior to termination of their employment or on a 'trigger event' such as ill health, divorce, children's education or to assist with buying a property.

Employee A works in X company's Dubai office, has an ISP and would like to help their daughter buy a house in Paris. In order to help fund their daughter's attempts to get on the property ladder, Employee A decides to withdraw their ISP. 

Ocorian have been administering employee incentive structures for over 15 years and have expansive experience in running savings plans for employees of large businesses from numerous jurisdictions throughout Europe, Middle East and Africa.

With a dedicated team of experienced professionals, sophisticated IT infrastructure and demonstrable track record in administering Employee Trusts, we can assist in the planning and implementation of ISPs to support their administration and visibility with employees.

Get in touch

Please get in touch with one of our team below if you wish to explore how Ocorian can assist you with the implementation of your new ISP.

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