4/2/2009
By Sophie Baker
The number of multinationals that plan to implement global funding policies across all aspects of retirement plan management by 2010 has increased to 87 per cent, according to Mercer.
The financial consultant's Multinational Survey also shows that 85 per cent of multinationals will use some form of 'global' approach to set their investment objectives by 2010, and 61 per cent now restrict new staff hires to defined contribution (DC) schemes.
Mercer questioned 49 multinationals, representing $437.3bn of pension scheme assets, based in North America, Europe and Asia.
"Changes in national and international accounting standards mean that volatility in pension funding levels and costs have a greater impact on company financials, making retirement plan risk management much more important to companies," commented David Fogarty, principal in Mercer's financial strategy group in London. "In addition, the tightening of national regulatory regimes means that costs are rising and plan fiduciaries - or regulators - are exerting greater pressure on the companies for monetary support to their pension scheme. Multinationals are reacting by applying
more corporate resource to setting and managing pension policy."
Mercer also found that these multinationals and continuing to limit the types of retirement plans available to new staff, with 61 per cent saying they have a policy of only using DC plans. In Europe, 80 per cent of respondents have a global policy to provide benefits for new hires using DC plans.
Over 70 per cent of respondents also see retirement plans as presenting a financial risk to their company, and most have taken action to address this issue. Over 80 per cent of those said they are addressing risk on a global basis.
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