EUROPE – Multinational companies are “moving strongly” towards more cross-border pensions, according to Mercer Investment Consulting.
“Despite the unique challenges they face in managing retirement plans across borders, many multinational corporations are moving strongly toward more centralised control and global management platforms, trends that will likely continue,” Mercer said.
"Multinationals are rising to the challenge of managing retirement plans on a cross-border basis," said Stacy Scapino, head of Mercer’s multinational investment consulting services.
"The primary drivers toward implementing a cross-border management framework are governance and risk and cost control.”
"Many multinational organisations are seeking to identify and gain more control over areas where costs can escalate and where there could be significant negative consequences to reputation,” added Tim Gardener, global head of Mercer Investment Consulting.
“Experience with clients has taught us that multi-country risk analysis and risk management can help global corporations meet their financial goals."
A Mercer survey – ‘The 2004 Financial Management of Multinational Retirement Plans Survey’ - found that in 2004, 61% of respondents indicated that they have some form of global funding policy and just 11% of respondents have no funding policies.
And it found a “strong trend” towards more global corporate oversight and the implementation of global plan governance principles.
The survey also found that few multinationals have an explicitly stated preference for setting up just defined contribution plans. “Most prefer an approach that ensures benefits are locally competitive to attract and retain the right employees while controlling costs,” Mercer said.
Multinationals are looking to compare themselves to their peers as well as build synergies between their own local plans, Mercer added. The firm is sponsoring a series of roundtables in Europe and the US on the topic.