Jefferson Smurfit is Ireland's flagship industrial multinational. Through a series of acquisitions the group has propelled itself into the first division of paper products companies operating on a worldwide basis.

Its group employee headcount is over 25,000, which increases to 45,000 if employees of associated companies are included. The Irish and UK portion of the workforce is now around 6,000 (with Ireland accounting only for 2,000), the continental Europe workforce is around 11,000 and in Latin America the group employs about 6,500, with the balance in the US.

In the group's quest for growth over the past 25 years, it quickly came to dominate the small Irish paper sector and then spread its interests into other local business areas, including pensions consultancy, where it owns 50% of Aon Beech Hill Consultants, which has become the Irish benefit consultancy arm of Aon.

Kevin Goss is managing director of the Dublin-based consultancy and also handles the pensions and benefits aspects of the group, working closely with the financial and human resources areas of Smurfit. This is a longstanding relationship, he explains. In 1974, the group decided to turn their pensions department into a commercial venture and it was merged with the pensions business of a major Dublin insurance brokerage in which Smurfit had a shareholding."

His role entails heavy involvement in the planning and running of the Smurfit pension programme virtually worldwide. "We do not look after the US plans from Dublin, these are handled from the states."

The corporate philosophy when acquiring a business is to maintain the commitments that people have, says Goss. "This is good from an employees' point of view, but it can certainly cause some headaches from an administrative and actuarial point of view as we end up with a myriad of different benefit structures and it is one of my roles to help sort these out."

There is quite an array of structures in Europe, with the major schemes in Ireland and the UK being on a traditional defined benefit (DB) basis. In the Netherlands the arrangements are also funded.

When it comes to France, where Smurfit made a large paper and board acquisition from Saint Gobain, it also inherited schemes in Spain, Italy and Belgium of differing sizes. "Virtually all of these arrangements were closed." And since most of the commitments in these companies are book reserved, there is little by way of external assets, says Goss. "It then becomes very much an accounting issue." The largest part of these schemes relate to termination indemnities, he adds.

The UK is probably where he has been most active over the past few years. It is also where the biggest source of assets has been, with some £200m in assets over four schemes. "We used to have 12 there, but we have managed to reduce this by merger." His current headache is the new pensions legislation. "It is the most regulated, if not over-regulated market, and they have not finished yet. While the objectives are understandable and reasonable, the actual implementation of the rules is over the top."

He is concerned that this will weaken the commitment of employers to DB schemes. "In the paper industry, we have many long-serving employees, who tend to benefit from DB plans," he points out. "Personally, I am in the DB camp, but with the costs and hassle that are imposed in running them, why should employers take them on? We will see more going for the easy option, but will it be in the best interest of employees?"

In fact, Smurfit has one defined contribution (DC) scheme in the UK, which it inherited with a plant in Kent taken over from News International.

"We are seeing a change in demands being made upon us," says Goss. "Last year a scheme for executives was approved for Spain. There is no doubt we are going to see a growth in this pattern and not just in Europe. We have seen the same thing in Mexico, in relation to highly paid employees and we expect the same in Colombia and Venezuela, where Smurfit has significant operations."

These schemes reflect the pressures on over-generous state pension provision. "Everyone I talk to agrees that the state systems have run their course and that painful decisions have to be made." Pointing to France's very high level of social security costs, he says: "You cannot add to these for ever. The competitiveness of other countries will become apparent. Monetary union will give more focus to this, as it will become very easy to compare costs across Europe." The outcome will be pressure on Europe's corporations to provide increasingly for retirement benefit options. "But then there is the problem of having to pay twice."

The ideal would be a European solution. "Our preferred option is to have a uniform approach in Europe, with a unified system. But the reality is that this is very remote, because countries are so fundamentally different." People's mindset needs to be changed about having to save for pensions. "While this is increasingly being appreciated, accepting its consequences is something else."

The cloud hanging over state systems has an immediate impact on the moves by senior people within companies for improved benefits. These arrangements, he says are more likely to be on a DC basis. "The uncertainty as to the level of state benefits makes it very hard for the employer to provide DB commitments without knowing what the total package involves."

While other groups are looking at the scope for a standard approach to managing the investment of their European funded schemes, Goss is dubious of this approach. "It would be very difficult to have a 'pan European pension fund', with so much in unitised assets for the UK, Ireland and the Netherlands and so on." What would defeat such an initiative in his view is the extent of local trustee involvement in asset management. "The problem is that the ownership of the assets is not in the company's hands - the company just happens to be the element that is in common. The trustees' ownership of of the property is different from one jurisdiction to another. In the UK we have four trustee boards that might not agree to any such proposals." He adds: "The Irish fund will have a different perspective on investment management to those in the UK, even though the brief is much the same and their benefits similar."

Undoubtedly, with a pan-European pension fund, some cost savings from economies of scale could be achieved. "But then you have to choose investment managers to get the level of returns you want. So you are back to the same local problems that each set of trustees has."

But that said, there is a marked similraity in approach between the main funded DB schemes, the Irish with Ir£170m in assets and the UK with £250m. The Dutch scheme, with some £15m in assets, is mainly invested in fixed interest type investments. "Bonds have done very well for them over the past 15 years or so."

Currently, the UK DB funds have three balanced managers: Mercury, Bank of Ireland Asset Managers (BIAM) and the Dublin-based Smurfit Paribas Asset Management, another operation in which the group has a stake. "They all have balanced manager remits, excluding property." This structure was put in place two years ago after a review that led to the reduction in fund numbers. This also resulted in a establishing a satellite portfolio of fixed interest investments to reflect the maturing liabilities in the funds, which is run separately by AMP Asset Management. in London.

In the Irish scheme, three balanced portfolios are now in place, run by BIAM, Smurfit Paribas and local NatWest subsidiary Ulster Bank Investment Managers. A fixed interest satellite portfolio is run by Friends Provident in Dublin.

Though the structural shape is much the same, the asset allocation within the portfolios are different, as the Irish weighting increasingly reflects a non-domestic equity exposure in line with other Irish pension funds, while the UK has a high domestic equity content. The likelihood of Ireland joining the new European monetary system and the UK remaining outside at least initially is one reason for increasing diverergence. Another is the change in holdings of group stock within the funds. Currently, the Irish fund holds about 7% in Smurfit shares, but is replacing this with non-domestic equity gradually. In the UK, where there is a 5% limit on self-investment specially imposed by legislation, around 3.5% of the main fund is in Smufit stock. "The Smurfit holding has been a very good perfomer for the funds," says Goss. "It used to be a good growth stock, but now its characteristic is changing and it is a cyclical. So it is not appropriate to have as much as would have been the case up to now."

Since the Smurfit group is relatively young on the international front, the question of mobile executives has not been a key issue, but that is changing as the numbers within the group moving from one location to another increases. Goss is working with the group to find a solution that will meet the pension needs of executives and be affordable. "Executives will be encouraged to join the local scheme. We are working on a DC arrangement that will top up as required, depending on local social security and occupational provision. The aim will be to replicate the benefits of the Irish scheme, which will be the reference model of the gap to be bridged." The main problem he acknowledges is determining what is appropriate for each country and, of course, that is a changing scenario regarding what social security is going to provide. Another problem is where there are no dual arrangements between countries.

Helping mobile executives to collect their benefits down the line, is another important element. "But all this does mean these programmes are onerous to manage."

One thing such a scheme does is to spotlight the cost of having mobile executives and the high support costs involved. "Pensions can be a significant additional cost over employing a local, so it becomes a matter of balancing these with the needs of the corporation."

Goss says: "There is certainly something to be done at EU and international level to ease the pensions lot of these employees.""