GLOBAL - Most multinationals lack the desired control over their retirement benefits, according to a Hewitt Associates survey.
Less than half the 100 multinationals surveyed considered themselves to be in control of various key retirement issues, such as aligning with business strategies, managing costs, managing risk, optimising processes, enabling their employees and executing globally.
A significant number of the respondents - located mainly in Europe and North America - did not have annual objectives (64%) or written global strategies (60%) for their retirement plans.
Hewitt senior consultant Tim Reay (pictured) said the most worrying finding was the extent to which a lot of companies did not really know was going on in their retirement strategies, meaning they did not feel in control as a result.
“They are not in control of a lot of aspects, particularly things like the cost and the risk. Without control they don’t know what is going on. The main thing they should do is to ensure they know about what they have around the world in terms of pension plans. It is still surprising how many companies don’t.”
According to Reay the reason behind the lack of control was that pensions were not considered a core risk for companies in the past. But pensions have become a more significant risk factor to companies in the last 5 to 10 years, and while this external environment has changed, the internal company environment has not really caught up.
Reay highlighted two key problems inherent in multinationals’ lack of retirement benefit control. “First of all, there is a financial risk – where costs in big plans can change unexpectedly. There is also a reputation risk that multinationals need to be wary of, because they are so in the public eye. Just a minor problem with a pension plan and it will probably be in newspapers across the world, which could affect the whole company.”
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