Welcome to Mercer's dedicated page for professionals in the finance area with an interest in retirement plans. The purpose of this site is to bring together articles and commentary from Mercer which we would expect to be of particular interest to finance professionals who have policy responsbility for pensions. We hope you will find the site useful and would very much welcome your feedback. 

To receive notification when new content is posted to this site, please subscribe by e-mail.

Our latest insights

International Accounting Standard 19: Whither, or wither?

Can changing attitudes towards pensions in the U.K. teach the rest of the world a lesson?

Recent events in the U.K. have led to dramatic changes in attitudes and culture concerning pensions and the associated financial risks. The U.K. experience offers valuable lessons for other countries.

Multi-Country asset pooling

Within multinational companies, local subsidiaries can reduce costs and gain efficiencies by using the global buying power of the total organisation. Our white paper provides background to multinationals considering multi-country asset pooling.

Global Retirement Insights: Pension Funding and Financial Markets: Analysts' and Credit Rating Agencies' Views   

Is your company managing its pension risk using the same measures of financial risk that analysts and rating agencies are applying currently? If not, you could be constraining your company’s share price or harming its credit rating. Our Global Retirement Insights: Pension Funding and Financial Markets: Analysts' and Credit Rating Agencies' Views reviews four principles that inform most analysts’ and rating agencies’ analysis of corporate pension risk.

Back to top

Annual retirement plan surveys

Back to top

The Mercer Retirement Financial Management (RFM) Framework

Five key areas of retirement financial management analysis

Mercer has developed a consulting methodology to help our clients manage the risks and cost involved in delivering employee benefits more effectively. The methodology adopts the perspective of a CFO or Finance Director and considers the potential impact of benefit commitments on company financials.

Starting with overall corporate cost and risk objectives, we analyse current policies to ensure that they are properly aligned with these objectives within the five areas of:

Accounting policy - Local and international accounting standards for pensions are evolving rapidly. The implementation of IAS19 and proposed changes to FAS87 expose company financials to pension funding and expensing risk to a much greater degree than was the case historically. This has caused companies with material pension liabilities to look more closely at their potential exposures and to review accounting and other policies accordingly. Of particular concern for many of our clients is the relative extent of their balance sheet and earnings exposure compared with local and international competitors.
 

Funding policy - Legislation governing minimum funding requirements for defined benefit pension funds is changing rapidly.  With the advent of regimes such as the Pension Protection Fund in the UK and the Dutch FTK standard, the potential cash contribution required in the event of an adverse movement in pension funding have become much more volatile. As a result, we are seeing clients focus much more on achieving a clear awareness of local regimes in order to implement a coherent global funding strategy which addresses both issues such as tax and solvency premium costs.

Investment policy - The net impact of changes to accounting and regulatory regimes has been a much stronger focus on pension fund investment risk by corporate sponsors.  Risk is no longer defined by way of fluctuations in the market value of defined benefit assets - instead, risk now means performance of a fund relative to movements in long dated bonds. Simulataneously, the range of risk management products available from investment banks and asset managers has expanded significantly in recent years.  Investment policies need to recognise the changed nature of risk and need to (where appropriate) incorporate use of sophisticated risk management products.

Benefit design policy - A company’s corporate objectives may drive a preferred policy towards pension plan design. There are many other ways in which a company can influence retirement plan design to meet its business objectives and deliver benefits with meet cost objectives.

Governance policy - The environment within which a company runs its retirement plans overlays all areas of pension plan policy. The degree of control over processes and the way in which decisions are made within a company have a significant effect on how pensions affect a company's business.  If a company has robust processes, competent decision making and clear lines of accountability, then this facilitates meeting corporate objectives and minimizing risk which adds to shareholder value.

The pages within this site are intended to help you understand how the financial management of pension plans can affect your business.

Back to top

Contacts for assistance

If you require further assistance with these issues, please contact the following:

  Americas - Barb Marder

  Europe - Mick Moloney

  Asia - Phil Shirley

Back to top