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Multinationals to consolidate pension advice - survey

GLOBAL – Multinational companies are likely to consolidate their pension advisors and service providers as they seek to exploit economies of scale, a new survey has claimed.

“Consolidation of various local advisors and service providers (actuaries, consultants, investment managers, custodians and administrators) also appears likely to accelerate in the next few years in the next few years,” said Towers Perrin.

It said the move would come “as multinationals seek savings through economies of scale and the efficiencies that often come with using few providers in their various locations around the globe”.

About 34% of respondents said they have already appointed a firm of global coordinating actuaries – with up to 20% considering doing so.

The remarks came in the firm’s new worldwide benefits management survey for 2004, which polled 134 of the world’s largest firms.

The survey also revealed the size of the benefit liabilities at multinationals. It said that 26% of companies reported global pension liabilities of more than 25% of their market capitalization. And three percent of respondents said their global pension liabilities were more than 100% of their market capitalization.

“These pension liabilities are also truly global: 31% of the participating companies have more than 50% of their pension liabilities outside of the headquarters country,” Towers said.

“Given the cost volatility of pension and other long-term benefit obligations - such as retiree medical benefits - sound worldwide benefit management policies and governance processes are a must for multinational companies today,” said Nigel Bateman, European head of the firm’s global consulting group.

The survey found that 70% of companies have set up central committees or management teams to oversee pensions and other employee benefits on a worldwide basis.

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