A common tool for successful global expansion is sending one or more employees of the parent company to work abroad for a limited time – the so-called expatriates.
But what are the pitfalls you need to avoid in order not to risk the cost of expansion more than you are tasting?
According to Anna Svedman, Head of International Business at SPP, it can be difficult to control all parameters associated with an external broadcast. Everything from regulatory compliance and management, to pension policy updates and clear employee communication, should be in place and kept up to date.
Otherwise, the company risks ending up in deadlocks that, over time, could lead to unforeseen costs and unnecessary hassles, she asserts.
Establishing a pension plan for foreign employees
One of the dilemmas highlighted by Anna Svedman is that employers completely fail to sign a pension plan for a person sent abroad. This may, for example, be the result of the employer losing pension payments to the sending person as collective agreements and other insurance solutions will continue to apply in Sweden.
If this is the case, then the employer may be liable to make late pension payments thereafter. Svedman cautions that in cases where an employer fails to sign an employee pension plan, health insurance automatically forfeits, which can lead to serious consequences.
Anna Svedman believes there are several simple steps to successfully solving the international employee pension puzzle.
Begin by specifying the insurances that must be in place before starting a foreign mission. Based on the regulations and the company’s pension policy, you can create a pension plan and create a plan for other insurances such as health insurance and other risk benefits, she says and continues:
The most important thing to include in an updated pension policy for expatriates is compensation for lost home-country pensions and clear frameworks for sickness compensation and other risk benefits.
A retirement counselor can help
Another step is enlisting the help of independent retirement advisors to find your way in the jungle of processes and regulations.
With the help of independent retirement advisors who specialize in issues related to international employees, you can reduce the administrative burden on your company, and avoid mistakes that lead to unnecessary costs and hassles.