International Benefits: Governance Matters

International Benefits: Governance Matters

Global renown as a world-leading International Finance Centre does not come about by accident.  There are many reasons why the Isle of Man enjoys such a status but, at the heart of it, is the long-standing regulatory and legal framework that has provided security and stability for tens of thousands of employees over many decades.

Strong governance is essential where complexity and risk abound and this is seldom more pertinent than in the long-term, evolving world of employee benefits, especially where an international client base is in play.

International Pension Plans (“IPPs”) are the bedrock of many employee benefit plans and here the Isle of Man boasts a multi-layered protective system. Tax rules determining matters such as the nature and timing of benefits have been in place since the 1970s, and have continually evolved over time with the changing landscape of pensions.  And in 2000, the Island introduced the Retirement Benefits Schemes Act to create a regulatory framework that has remained best of breed amongst international finance centres ever since.  Within this, the Isle of Man boasts a two-pronged regulatory approach.

Firstly, the legislation provides for oversight of the scheme itself and applies that through detailed regulations, covering all aspects of pension administration, management and reporting,.

Secondly, there is an approval and monitoring system for professional retirement benefit schemes administrators and trustees, including stringent fitness and propriety criteria for individuals, directors and management.  Further layers of protection are found in the Isle of Man’s highly sophisticated trust law which, in turn, benefits from well-developed asset protection attributes, also enshrined in law.

Beyond IPPs, the Isle of Man’s regulatory and governance environment pays dividends for other types of employee benefit structuring.  For example, employee share plans and global employment companies (GECs) fall within the domain of the mature trust and corporate services sector which is also a highly regulated environment with high standards of corporate governance baked in.

Use of captive insurance companies for insured group benefits are on the rise and these too are bound into a mature insurance regulatory structure meeting the highest of global standards.

Being part of a highly regulated employee benefits provider community in the Isle of Man does not, however, translate into as rigid a proposition as the uninitiated may believe.  Indeed, flexible programme design within these strong governance parameters is a key selling point of Isle of Man providers.

This all adds up to an enviable operating environment built with governance, security and stability at its foundation.  Little wonder, then, that employers gravitate towards the Isle of Man when taking responsibility for the long-term financial security of their employees.