TThe he IInternational nternational BBenefits enefits SSolutionolution

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Principal CharacteristicsPrincipal Characteristics

• Used to provide hard currency retirement Used to provide hard currency retirement and other benefits for globalists and key and other benefits for globalists and key local nationals.local nationals.

• In most cases it will be possible to tax-In most cases it will be possible to tax-effectively pre-fund the benefits.effectively pre-fund the benefits.

• Choice of world class investment managers.Choice of world class investment managers.• Web-based administration and participant Web-based administration and participant

access.access.• ““Pre-packaged” or custom solutions Pre-packaged” or custom solutions

available.available.

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General StructureGeneral Structure

• Company sets up a subsidiary (PenCo) whose sole Company sets up a subsidiary (PenCo) whose sole function is provision of retirement and other function is provision of retirement and other benefits for participating employees of group benefits for participating employees of group companies.companies.

• PenCo establishes a number of financing vehicles, PenCo establishes a number of financing vehicles, depending on jurisdictions in which plan members depending on jurisdictions in which plan members will be tax resident:will be tax resident:– Secular TrustSecular Trust– Rabbi TrustRabbi Trust– Book ReserveBook Reserve

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Financing VehiclesFinancing Vehicles

• Established in a jurisdiction with flexible Established in a jurisdiction with flexible regulatory and fiscal regimes for pension regulatory and fiscal regimes for pension arrangements (e.g., Jersey, Bermuda, arrangements (e.g., Jersey, Bermuda, Hong Kong)Hong Kong)

• Location may be influenced by:Location may be influenced by:– Location of majority of participants;Location of majority of participants;– Structure of group of companiesStructure of group of companies– Preference of key decision makersPreference of key decision makers

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OperationOperation

• Administered as one plan, with participants Administered as one plan, with participants moving seamlessly from one financing moving seamlessly from one financing vehicle to another as they change locations.vehicle to another as they change locations.

• PenCo makes contributions to the PenCo makes contributions to the appropriate vehicles and re-charges the appropriate vehicles and re-charges the relevant corporate entity.relevant corporate entity.

• Company and participants have a choice of Company and participants have a choice of “pre-packaged” or custom-designed solutions “pre-packaged” or custom-designed solutions (e.g., plan design, investment choices and(e.g., plan design, investment choices and administration). administration).

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Plan DesignPlan Design• ““Pre-packaged” retirement plan design is:Pre-packaged” retirement plan design is:

– Defined ContributionDefined Contribution– Contributions vary by age band and by region, Contributions vary by age band and by region,

with countries grouped into 3 regions depending with countries grouped into 3 regions depending on the levels of social security and other on the levels of social security and other benefitsbenefits

– Company has choice of target level of total Company has choice of target level of total retirement benefits, and components (e.g., retirement benefits, and components (e.g., company basic, employee voluntary, company company basic, employee voluntary, company basic match and company performance match).basic match and company performance match).

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Plan Design Plan Design (cont’d)(cont’d)

• Custom retirement plan design can Custom retirement plan design can be:be:– Defined Contribution, Defined Defined Contribution, Defined

Benefit,Benefit,or hybridor hybrid

– Anything the client wantsAnything the client wants(must be careful to ensure design (must be careful to ensure design is tax-efficient)is tax-efficient)

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Investment ChoicesInvestment Choices

• ““Pre-packaged” investment choices are:Pre-packaged” investment choices are:– Fidelity or BGIFidelity or BGI– ““Menu” of funds available from eachMenu” of funds available from each

• Custom investment choices could be:Custom investment choices could be:– Company’s choice of investment Company’s choice of investment

manager and fundsmanager and funds– Perhaps use same manager and funds Perhaps use same manager and funds

as US 401(k)as US 401(k)

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AdministrationAdministration

• ““Pre-packaged” administration is:Pre-packaged” administration is:– Dominion Trustees, JerseyDominion Trustees, Jersey– Web-based system allowing participants Web-based system allowing participants

access to their accounts on a “self-access to their accounts on a “self-service” basisservice” basis

• Custom administration could be:Custom administration could be:– company choice of external administratorcompany choice of external administrator– internal administrationinternal administration

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Project ImplementationProject Implementation

• Research and designResearch and design– Review corporate objectivesReview corporate objectives– Determine target participantsDetermine target participants– Review possible structures based on Review possible structures based on

countries involvedcountries involved– Develop proposed design and company Develop proposed design and company

costscosts– Determine appropriate plan locationDetermine appropriate plan location

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Project Implementation Project Implementation (cont’d)(cont’d)

• Investment ChoicesInvestment Choices– Select investment managerSelect investment manager– Determine investment options / choicesDetermine investment options / choices

• Establish PenCo, plan document and Establish PenCo, plan document and financing vehiclesfinancing vehicles

• Appoint administrator and set up systems, Appoint administrator and set up systems, procedures and linkages with company procedures and linkages with company and investment managersand investment managers

• Communicate to participantsCommunicate to participants