Expat Financial Packages Are Getting Smaller

If one is considering an expatriate (expat) assignment, Expat Life Gets Less Cushy by Katherine Rosman of The Wall Street Journal will be good to read. The article notes that expat benefits are declining as the dollar weakens and more companies expect an international assignment to be part of a normal rotation for advancement. For example, the average expat compensation for Tokyo has declined from 3.6 base in 1994 to 1.8 times base today.

When we did an expat assignment 2000, our total compensation was about 2.5 times base salary. To note, about 35% of the additional compensation was for housing, which was paid directly to the landlord. The balance was for cost of living differences (food, utilities, entertainment), currency fluctuation offsets, and travel home one time a year. If we had children that would have added another .25 times base for each child, for education and living costs.

Reducing expat compensation seems to be another sign of the times as companies are trying to cut costs in every area possible. While I didn't think 2.5 times base was excessive, the amount was still reasonably generous. However, at a compensation of 1.8 times base, we might have lost money living overseas and therefore, it would have been a more difficult decision on whether to accept the assignment.

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Photo Credit: morgueFile.com, Alan Mort

This is not financial advice. Please consult a professional advisor.

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