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Our Retirement, Risk & Finance Perspective and related material cover the pension landscape, tracking both financial and human resource issues as they develop.
In our archives, you can access past issues of the Retirement, Risk & Finance Perspective and download the complete PDF which are available in English. The past editions of the other languages are available from their respective home pages: Dutch, French, German, Italian, Portuguese and Spanish.
You may also directly access the topic-based collection . Previous editions:
Prior to 2009: 19 / Special edition / 18 / 17 / 16 / 15 / 14 / 13 / 12 / 11 / 10 / 9 / 8 / 7 / 6 / 5 / 4 / 3 / 2 / 1
Despite signs of economic recovery in the global market, many organizations are still trying to find ways to cut costs. People costs are not immune, and retirement benefits, which place a significant financial burden on some employers, are a particular area of focus. This article discusses various approaches that retirement plan sponsors might consider to reduce the cost of their retirement programs.
The psychology behind pension plan decisions – Part 1: Enrollment Defined contribution plans – now the norm for retirement provision worldwide – require plan members to make decisions about joining, investment options and drawdown in retirement. Drawing on the work of academics in the field of behavioral finance, this article explores the psychology behind plan member behavior at enrollment and provides ideas for trustees and plan sponsors on strategies for making plans work effectively in light of this behavior.
Expatriate localization: A Chinese solution The economic downturn has caused many multinationals operating in China to consider localization to reduce the cost of expatriate packages. While localizing elements such as cash, allowances and short-term benefits (for example, health care) is relatively easy, long-term benefits, such as pension plans, present greater challenges. In this article, we discuss the pension situation in China and the various options available to multinationals.
Lessons to learn from DC systems in the Asia Pacific region Authorities and employers around the world are struggling to design the perfect DC plan, one that manages company risks while generating long-term growth for the provision of pension benefits. While many good examples of programs exist worldwide, the Asia Pacific region has several large, mature DC systems that have developed and improved over many years. This article covers some of the key lessons from the experiences of the mandatory DC systems of Australia, Malaysia and Singapore.
DC plan inefficiencies: A European view DC schemes often provide lower pensions than do DB plans. Although there are inefficiencies in the DC system, these are fundamentally solvable. The shortfall in DC schemes actually stems from the tax system, which will not allow for proper DC accrual. With much at risk, governments may need to rethink their strategies concerning DC schemes – or watch their second pillar erode over time.
Pension crisis: Overview of government reactions A bleak economy and demographic changes are forcing governments to modify their benefit and pension systems. In this article, we look at some of the trends in different countries, their impact on multinationals’ plans and what companies should consider going forward.
Government reactions: Changing the rules Governments worldwide are amending their pension rules to help relieve the financial pressures, caused by the economic recession, on multinationals sponsoring DB and DC plans. This article looks at the actual changes made or proposed by governments and legislators, and some actions companies might take in response.
Employer reactions: Challenges and opportunities Severe economic conditions have raised the stakes for multinational sponsors of retirement plans. Here we look at not only the challenges companies face, but also the opportunities available for making strategic changes as they try to shape future retirement plans.
Plan member reactions: They’re concerned The impact of the economic crisis has had significant effects on both young and older workers, reflecting their concerns about retiring with adequate money. This article addresses the challenges companies face and the urgent need for them to address members’ concerns and offer guidance.
Retirement design: Which lens are you looking through? Retirement plans are in the spotlight, with companies challenged to demonstrate their value, not their cost; their opportunities, not their risks; and their relevance rather than their benevolence. Achieving the right balance can be made easier by establishing clear objectives and priorities early on. Here, we look at retirement design from four perspectives – market; cost and risk; the employee; and the employer – and illustrate the opportunities available for plan redesign in the current difficult environment.
International pension plans: Selecting a provider
Making the case for retirement savings plans in the Gulf Region In the Middle East, the need for retirement plans has never been stronger. With the region’s unprecedented economic growth, and the longer work assignments for expatriates in the GCC region, statutory end-of-service benefits are no longer adequate. This article looks at why today’s companies are introducing retirement plans that offer a competitive advantage, increase employee engagement and provide an enhanced benefit guarantee that is both transparent and secure.
Defined contribution global plan management Defined contribution (DC) plans continue to grow in prevalence, size and importance around the world. This article reviews how employers can manage their DC plans more effectively by using Mercer's new DC Global Plan Management (DC/GPM).
Shockwaves: The financial crisis and its impact on your retirement programs It’s no secret that the current financial crisis has sent shock waves throughout the world’s markets. We would be remiss if we didn’t consider the substantial impact the current economic climate is having and will continue to have on retirement plans and their investments. Our dedicated site, Unprecedented times, contains articles and podcasts that provide Mercer's evolving views on the implications of the present situation.
Risk and response: Getting commercial
Expat benefits: Achieving parity in a global arena The explosion in the number of expatriates is forcing multinationals to create benefit programs that are globally consistent yet appropriate for each location. Drawing from Mercer's recent survey findings on expat benefits, we look at why the traditional approach to providing benefits may no longer be sufficient for these globally mobile employees.
Pension reform: Investment flexibility in India With private pension systems expanding in India, more flexible investment options have surfaced. This article examines the revised investment pattern in this country and the opportunities it offers for companies’ plans.
Gullible's Travels IV: Toward the 21st-century plan design In this the final article in the Gullible's Travels series, the author explores the implications of the current financial crisis from a unique perspective - that of changing human values - and examines how political, economic and social changes may trigger a transformation in pension plan design in the future.
The Future of Pensions and Healthcare in a Rapidly Ageing World: Scenarios to 2030 This article provides an overview of the World Economic Forum’s report, in partnership with Mercer, on an ageing society, the impact on pensions and health care provision and the implications for businesses and societies worldwide.
Pension plan design: Implications of an ageing population
DB plans and an ageing population: Implications and action steps for employers In this article, the author adopts the perspective of a multinational sponsor of DB plans and reflects on the potential consequences of each of the Forum’s three scenarios for financing and managing these plans.
Global impact: Healthcare planning for an ageing world This article tracks the impact of the macro forces identified by the Forum’s report on the future health of the global workforce, on companies’ financial health and on global economic growth.
Labor pains: Planning for the future with an ageing workforce Businesses worldwide face many challenges as they try to shape a future workforce that will fit their needs. Here we look at how companies can meet these challenges and prepare for the future by using workforce planning.
Surviving uncertainty: Benefits in a time of recession This article discusses - Are people an investment to be managed or an expense to be reduced? Are benefit plans up to local management or an activity for headquarters to orchestrate?
Pan-European pensions: The wrong answer to the right questions? This article briefly describes what a Pan-European pension plan is, with an overview of the potential benefits and a point of view on how multinationals can move toward implementing such an arrangement.
Pricing the deal: The impact of the credit crisis on pension liabilities in transactions This article briefly describes the impact of the credit crisis on pension liabilities in transactions.
Common themes, cultural differences: Defined contribution plans in Europe This article discusses defined contribution (DC) plans across Europe and introduce some common themes as well as cultural differences that will help multinational plan sponsors find opportunities to streamline their DC plan designs and plan management practices across borders.
The challenges of acquisitions in Eastern Europe This is an article from Edition 17 of our Global Retirement Perspective. Perter Horan looks at the challenges acquisitions in Eastern Europe pose.
Gullible’s Travels, Part III: Capturing the aging workforce to stay competitive The world's population is aging at an unprecedented rate. This article examines the effects of an aging workforce and explores how businesses can achieve competitive advantage by keeping older employees in the workforce longer and leveraging their skills.
Middle East demographics drive HR and benefits change This is an article form Edition 17 of our Global Retirement Perspective. It is our second article looking at the changing HR and benefits situation in the Middle East.
Retirement in India: Pension benefits and beyond This article provides an overview of retirement benefits in India and examines relevant issues that are important from an employer’s point of view. It covers income replacement ratio, the fringe benefit tax (FBT), and the challenges that employers are facing.
The emergence of employee benefits in the UAE Addressing the rapidly rising expatriate population in the United Arab Emirates (UAE), Mercer's Middle East Survey 2007/2008 lifts the lid on the changing face of multinationals' benefit and HR practices in this very dynamic Gulf state. The article focuses on the growing demand for Western-style remuneration practices, notably the emerging trend for multinationals to offer supplemental pension and medical plans, and provides invaluable insight into what we can expect during 2008 and beyond.
East Meets West: The challenges of cross-border M&As Cross-border mergers and acquisitions are on the rise. While all M&As carry risks, cross-border ones come with unique types of challenges and opportunities. Mercer recently worked with an Asian multinational on its purchase of a US company. Here we discuss some of the key issues involved.
Employer-provided DC plans: Should employers worry about the “governance gap”? This article outlines the basic issues an employer should consider in deciding whether to establish a contract-based governance structure. Using the United Kingdom as a country case study, we cover the risks and pitfalls of both putting a formal governance structure in place and, just as important, of failing to do so.
Section 409A and non-US retirement arrangements: What you should know Employers with any US taxpaying employees who participate in their non-US retirement plans must become familiar with Section 409A of the US Internal Revenue Code. Here we review the serious tax implications for companies of not complying with Section 409A.
Pension landscape: The risk-free road Recently, pension plan sponsors have been looking hard at the risks that they carry and how to mitigate them. New solutions and players in the market have expanded dramatically. This article puts the markers back on the map to help you achieve a risk-free pension plan.
China’s evolving pension market: Ready, steady, wait and see? China’s explosive economic growth paradoxically has created significant labor shortages, creating workforce challenges for many multinationals (MNCs) doing business there. Consequently, many MNCs have begun to look at their total rewards programs, including their pension plans, as a solution. Using results from Mercer’s Total Benefits Trend Survey, we take a look at where retirement plans fit within the total benefits equation.
Gullible's Travels, Part II: Is it time to call your psychologist? In our second article in the Design for the Future Series, we explore insights from behavioral economists and psychologists on how individuals perceive risks associated with planning for retirement. This article explores straightforward approaches employers can adopt to better engage their employees and the implications for plan designs.
The new Swedish ITP plan: Concept and impact on business The new ITP, the long-anticipated Swedish pension plan for white collar workers in the private sector, launched on 1 July 2007. This article discusses the fundamentals of the new ITP plan and how this will affect all businesses in Sweden.
Gullible’s Travels: Journeys in plan design This article examines behavioural economics and Enterprise Risk Management and explores how employers can use risk analysis to better manage their financial risks by both redesigning their plans and changing their investment strategies.
Defined contribution plans: The challenge of achieving benefit adequacy Our new DC series kicks off with a look at the history of DC plan growth and the key features that have evolved to engage members to contribute adequately to their retirement funds.
The pension landscape: What do all the surveys tell us? Our survey addict delves into some of the surveys published recently on pension plan funding around the world.
South Korea: Corporate pension developments We look at how multinationals operating in Korea are responding to the Employee Retirement Security Act and its impact on retirement planning for these companies
In this article we look at why Germany's top companies are attracted to Contractual Trust Arrangements (CTAs) as a means of funding their pension schemes, and consider what the alternatives have to offer.
Supplemental retirement plans on rise in Brazil Brazil's supplementary pension system is currently enjoying a rise in popularity and is expected to double in size in the next five years.
Pension Protection Act of 2006 In this article: the effects of the recent pension reform legislation in the US on DB plans is examined.
Managing corporate pensions exposure: The power of Value-at-Risk This article introduces Value at Risk methodologies for managing corporate exposure to defined benefit pensions.
World-class pension plan governance: How to achieve it The final article in our series on plan governance takes a look at how fiduciaries might align their own governance structures with those of their corporate sponsor, particularly those organisations which are aspiring to world-class corporate governance. We look at why this is an issue now, how fiduciaries can bridge the gap between where they currently reside in terms of governance and where they aspire to be, and the pay-off they can expect as a result.
The retirement landscape in Russia: a brief update We look at Russia's three-pillar approach to retirement provision and the new trend for corporate pension plans introduced by Russia's big multinationals.
Turkey's Private Pension System: A new era in retirement provision It is six years since Turkey's Private Pension System was introduced. This article outlines the system and examines what has been achieved in that time.
The Southeast Asian tigers: Retirement coverage in ASEAN Increased labour costs in China and India have led business leaders to look for alternatives in the region. In this article we explore the retirement systems, legislative updates and the trend towards defined contribution in Southeast Asian countries.
Implementing a governance framework: From theory to reality We consider -in this second part of our series on global governance - the steps companies need to take to overcome the internal and external challenges that may inhibit their ability to build effective governance frameworks.
Pensions across Europe: A work in progress We look at how to find and implement an appropriate strategy, focussing on some key potential solutions, regardless of whether pension plans are defined benefit or defined contribution.
Pension Protection Act of 2006: Dust is settling Now that companies have had a chance to start absorbing the new legislation in the US, we follow up our previous article.
Getting real with retirement benefits Mercer recently surveyed a representative group of multinational companies on their thoughts and intentions about key pension issues. Their answers uncovered some very specific trends and opinions.
Lessons from Hong Kong - Retirement system design Earlier this year, Mercer won a unique competition – designing Hong Kong’s future retirement system. Mercer’s winning entry was designed to address not only Hong Kong’s issues, but also some of the broader retirement challenges facing many countries.
Pension News Flash: Thailand plan delayed to 2008 Thailand is planning to introduce a mandatory retirement plan in 2008. The new legislation was supposed to take effect in 2007 but has recently been postponed. The recent political events might cast additional doubt on the effective date.
The buck stops – where? Pensions in the boardroom Decisions on pensions can have a significant impact on a company. Making effective decisions in this complex area is crucial – but this requires scarce executive time to understand the exposure a business faces from its pension liabilities.
The impact of mortality improvements on pensions Companies that sponsor DB plans and their actuaries are left with difficult decisions about what allowance to make for future age improvements when determining cash and accounting costs.
Here we go again! An improved process for year-end disclosure Actuaries continue to develop more sophisticated tools for establishing assumptions, and these have been generally well-received by clients and auditors. However, the key to successful and supportable disclosure lies in a well-defined process document.
The evolving Mexican retirement landscape offers multinational companies opportunities to restructure their retirement arrangements around solid fiscal principles.
Pension News Flash: Pension Protection Act of 2006 The US Congress has finally passed pension reform. Pundits are calling it the most significant piece of pension legislation since the Employee Retirement Income Security Act of 1974 (ERISA).
Managing an unwanted risk for defined benefit pension funds This article considers the issues underlying active management of pension fund interest rate exposure and offers practical ways of adopting some of the solutions now available.
The last samurai: The end of executive retirement plans in Japan This article looks at the challenges facing companies looking to re-engineer executive compensation and outlines the options and alternatives available.
Providing UK executive pensions - where to now? New legislation has changed the landscape of pension provision in the UK. The new rules have practical consequences for executives but also introduce new options for employers and individuals alike.
To freeze or not to freeze: observations on the US pension landscape In this first of a series of related articles we examine what is driving the change, and what issues employers should consider if they are thinking of transitioning to DC. The article has a US focus but a global relevance.
Hot potato: Can employees handle pension risks shunned by employers? The events of the last decade have made it clear that providing lifetime pensions to a population is a risky proposition. Traditional social security systems and defined benefit plans are proving to be more expensive than expected.
Mind the Gap - International retirement plans and other global mobile retirement delivery approaches As companies become more global, with headquarters countries comprising an increasingly smaller percentage of the total employee population, employees on senior management fast tracks are now moving around globally with no clear home country.
A new approach to Dutch pensions Employer-sponsored plans have traditionally been final salary defined benefit (DB) plans, but there has been a very strong trend to career average DB plans in recent years.
Pension news flash: Proposed changes to U.S. Pension Accounting Standards The Financial Accounting Standards Board (FASB) is on course to overhaul employers' accounting for pension, retiree medical and other postretirement benefits. The latest development is the March 31 release of an exposure draft.
A defined benefit plan without volatility! Here we take a look at a recent innovative plan design - the Retirement Shares Plan - that might be ideal for plan sponsors who want to maintain a defined benefit plan for their employees, but reduce their exposure to investment, interest rate, and mortality risks.
Benefits for globally mobile employees - Tried and tested policies for traditional assignees In part two of our three-part series on expatriate retirement issues, we examine the traditional approaches to providing retirement benefits to expatriates, including the structure, administration, and monitoring of such programmes.
France: A new landscape for employer-provided retirement plans Recent pension legislation is leading to significant changes in the French corporate pension system. This article reviews some of the key changes and identifies potential shifts that may occur in the marketplace as a result.
Pension News Flash: Assumptions for year-end accounting disclosure In this Pension News Flash, we review how 2005 ended up, and discuss trends in discount rates, asset returns, and other critical assumptions.
"And what about my pension?": Harmonizing globally mobile employees' needs with business objectives A look at alternative strategies for using retirement benefit packages to facilitate global mobility and long-term employment. We describe recent developments and the results of our 2005 survey on expatriate benefits as we outline best practices.
Retirement plans across borders: The case for Pan Asia-Pacific pensions For a typical multinational company, providing retirement benefits to employees in the Asia-Pacific region presents several challenges. Mercer's Phil Shirley examines those challenges.
India: Recent issues in the retirement benefits market In a country like India, where social security measures are insignificant and individuals are often either ill-organized or inattentive to planning and providing for their old age, the employer has a significant financial and social role to play.
It is an interesting time of transition for the Austrian pension market. It will be important for multinationals with Austrian operations to watch the pension landscape so they can anticipate changes and modify benefit design programs accordingly.
The new global defined contribution environment Recent developments affecting the Australian superannuation industry have lessons for other countries that are likely to experience similar trends. This article examines what lessons and insights can be observed from the Australian experience.
Korea: Pension plan accounting New pension legislation is shaping the corporate pension system in Korea. In addition, Korea is one of the few remaining industrialised countries that does not require GAAP accounting for pensions. We explore the changing face of Korean pensions.
UK pensions: The price of peace We consider the impact of current economic factors and the recent changes in UK pension legislation from the point of view of multinationals with UK subsidiaries.
Pension News Flash: Year-end accounting assumption The economic environment and increasing auditor scrutiny make each year end more challenging, and 2005 promises to be no exception. In this Pension News Flash, we highlight issues on setting key assumptions for pension programs around the globe.
Corporate governance: A different type of workout The 2004 financial reporting season is over, with over 5,000 companies having labored diligently to comply with Section 404 requirements of the Sarbanes-Oxley Act. A review.
Switzerland: New pension fund laws and tax regulations We consider the extent of these changes and their implications for multinational companies.
Brazil: Recent changes in private pension legislation Here we look at the effects of these changes on plan design, administration, and corporate governance.
Pension crisis in the United States - and the rest of the defined benefit world Here we explore how difficult economic conditions are affecting retirement programs not only in the US but also worldwide.
Pension news flash - Retirement issues: Pensions in Latin America We examine their considerable impact on governments, individuals, families, and companies in providing retirement security for millions of citizens.
The financing of pension liabilities is now firmly a boardroom issue for most multinationals. This article covers several issues of concern to pension plan sponsors, including pension risks, how pension liabilities affect the balance sheet, and some insights into how analysts are viewing pensions.
Fast forward China: World's fastest growing economy focuses on its private pension market China's economy is growing at an unprecedented rate and the country is firmly on the path of changing from a developing to a developed one. This article looks at changes in the private pensions market and examines some of the complex issues facing multinationals regarding Chinese pension plans.
Germany is well known as a country with many unfunded pension liabilities. However, many companies are reviewing their approach to pension funding and there is a move towards the concept of matching assets to pension liabilities. This article will take a look at some of the issues driving this trend and identify areas of further analysis that sponsors of German pension plans may want to explore.
Pension news flash - Emerging pension legislation in Asia Asian economies are grappling with the challenges of aging and financing the retirement of future generations. This news summary covers some important legislation that addresses some of these concerns.
Fulfilling the global DC mandate in Japan In contrast to approaching retirement programs locally, many multinationals are now adopting a global strategy, introducing equivalent pension plans across many countries. Here we cover the challenges global benefits managers face in implementing a DC plan in Japan.
United Kingdom: Tax simplification of pensions: Some international angles Recently passed UK tax legislation will materially affect pensions for expatriates to and from the UK. Here we take a look at some of the short and long-term implications.
Defined benefit plans - Still a good idea? Employers are questioning the merits of offering DB pension plans. This article explains why they can be a source of substantial value to both employers and employees
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