The International Benefits Solution

2 Principal Characteristics Used to provide hard currency retirement and other benefits for globalists and key local nationals. Used to provide hard currency retirement and other benefits for globalists and key local nationals. In most cases it will be possible to tax-effectively pre-fund the benefits. In most cases it will be possible to tax-effectively pre-fund the benefits. Choice of world class investment managers. Choice of world class investment managers. Web-based administration and participant access. Web-based administration and participant access. “Pre-packaged” or custom solutions available. “Pre-packaged” or custom solutions available.

3 General Structure Company sets up a subsidiary (PenCo) whose sole function is provision of retirement and other benefits for participating employees of group companies. Company sets up a subsidiary (PenCo) whose sole function is provision of retirement and other benefits for participating employees of group companies. PenCo establishes a number of financing vehicles, depending on jurisdictions in which plan members will be tax resident: PenCo establishes a number of financing vehicles, depending on jurisdictions in which plan members will be tax resident: –Secular Trust –Rabbi Trust –Book Reserve

4 Financing Vehicles Established in a jurisdiction with flexible regulatory and fiscal regimes for pension arrangements (e.g., Jersey, Bermuda, Hong Kong) Established in a jurisdiction with flexible regulatory and fiscal regimes for pension arrangements (e.g., Jersey, Bermuda, Hong Kong) Location may be influenced by: Location may be influenced by: –Location of majority of participants; –Structure of group of companies –Preference of key decision makers

5 Operation Administered as one plan, with participants moving seamlessly from one financing vehicle to another as they change locations. Administered as one plan, with participants moving seamlessly from one financing vehicle to another as they change locations. PenCo makes contributions to the appropriate vehicles and re-charges the relevant corporate entity. PenCo makes contributions to the appropriate vehicles and re-charges the relevant corporate entity. Company and participants have a choice of “pre-packaged” or custom-designed solutions (e.g., plan design, investment choices and administration). Company and participants have a choice of “pre-packaged” or custom-designed solutions (e.g., plan design, investment choices and administration).

6 Plan Design “Pre-packaged” retirement plan design is: “Pre-packaged” retirement plan design is: –Defined Contribution –Contributions vary by age band and by region, with countries grouped into 3 regions depending on the levels of social security and other benefits –Company has choice of target level of total retirement benefits, and components (e.g., company basic, employee voluntary, company basic match and company performance match).

7 Plan Design (cont’d) Custom retirement plan design can be: Custom retirement plan design can be: –Defined Contribution, Defined Benefit, or hybrid –Anything the client wants (must be careful to ensure design is tax-efficient)

8 Investment Choices “Pre-packaged” investment choices are: “Pre-packaged” investment choices are: –Fidelity or BGI –“Menu” of funds available from each Custom investment choices could be: Custom investment choices could be: –Company’s choice of investment manager and funds –Perhaps use same manager and funds as US 401(k)

9 Administration “Pre-packaged” administration is: “Pre-packaged” administration is: –Dominion Trustees, Jersey –Web-based system allowing participants access to their accounts on a “self-service” basis Custom administration could be: Custom administration could be: –company choice of external administrator –internal administration

10 Project Implementation Research and design Research and design –Review corporate objectives –Determine target participants –Review possible structures based on countries involved –Develop proposed design and company costs –Determine appropriate plan location

11 Project Implementation (cont’d) Investment Choices Investment Choices –Select investment manager –Determine investment options / choices Establish PenCo, plan document and financing vehicles Establish PenCo, plan document and financing vehicles Appoint administrator and set up systems, procedures and linkages with company and investment managers Appoint administrator and set up systems, procedures and linkages with company and investment managers Communicate to participants Communicate to participants