By Anna Budnik, Director, Integrated & Global Solutions (IGS), WTW
The importance of Global Retirement Management (GRM)
As companies expand their operations globally, the need for a consistent and proactive approach to managing benefit programs, particularly retirement plans, becomes increasingly important as a tool to support financial wellbeing. One of our clients, for instance, has expanded its operations to over 30 countries across nearly every continent. This expansion has necessitated a more specialized and coordinated approach to managing retirement programs, which are often complex and subject to varying regulatory environments.
From GBM to GRM
Like many organizations, this company started with a Global Benefits Management (GBM) model, which centralizes the management and oversight of health and risk programs. However, the unique challenges of retirement programs, including investment and compliance aspects, often require a more specialized approach. Transitioning to a Global Retirement Management (GRM) model can provide the necessary local expertise and global coordination to navigate these complexities.
Early wins and future vision
Stakeholder alignment: One of the early victories in implementing GRM is aligning key stakeholders, such as HR and Finance, on global retirement principles and objectives. This alignment ensures that all parties are working towards the same goals and can make informed decisions.
Regular governance meetings: Establishing an effective governance structure and establishing ongoing regular governance meetings, such as quarterly retirement governance meetings, helps to report findings and gather leadership perspectives. These meetings ensure that the retirement program remains aligned with the organization's overall strategy and that any issues are addressed promptly.
Local expertise and support: The company partnered with WTW who provided the local retirement and investment expertise needed to address specific market challenges. Such partnerships can help organizations navigate regulatory changes and ensure that their retirement programs are both compliant and effective.
Plan improvements: Specific improvements can be made to enhance the effectiveness of retirement plans. For example, the above-mentioned company reviewed the key plan features and providers in countries like Japan, France, and the Netherlands and are able improve investment options, reduce provider fees and prepare for regulatory changes. These improvements not only benefit employees but also help the organization manage costs and risks.
Enhanced collaboration: The GRM framework can strengthen the working relationship between HR and Finance, leading to a more consistent and supportive approach for affiliates. This collaboration is crucial for ensuring that retirement programs are well-managed and aligned with the organization's goals.
The evolution of an International Savings Plan spanning multiple countries
Background and global footprint: Another large organization, with a significant global presence, established an International Savings Plan (ISP) designed to attract experienced key talent. Initially focused on employees in one of the Middle East countries, the plan is designed to evolve and expand to meet the changing needs of their diverse workforce.
Structure and flexibility: The ISP is a Defined Contribution Savings plan designed to also prefund mandatory End of Service Benefits (EOSB) which are common in Middle East countries. Its structure allows for cross-border facilitation and has the flexibility to meet employee needs through savings they can access as needed or by allowing the funds to grow to support retirement readiness. These international / cross-border plans can be leveraged to cover local employees in countries with high government debt, inflation, unstable currency exchange rates or even countries with small headcount. For this particular organization, their ISP offers diversified investment options, including Shariah-compliant funds, and an online member platform that sees high engagement.
Recent changes and future vision: Following an employee listening survey, the company engaged WTW to conduct a holistic review of the plan. The survey revealed a desire for better fund options, lower investment fees, and improved member communications. In response, the company made several changes:
Better investment terms: Access to diverse investments, including private equity, more Shariah and ESG asset classes, and passive index trackers.
Cost savings: Leveraging institutional share classes to lower investment management fees.
Enhanced communications: Providing more education and transparency plan members.
Improved governance: Expanding the DC governance model to ensure ongoing oversight.
These changes have reduced member fees and improved services, creating a win-win situation for both employees and the business. The company is poised to continue evolving and expanding plan membership, offering better scale-based investment products and aligning with the company's global expansion.
Effective global retirement management (GRM) is essential for organizations operating in a global landscape. By aligning stakeholders, establishing regular governance meetings, leveraging local expertise, and making targeted improvements, organizations can achieve cost savings, mitigate risks, and improve employee outcomes. These best practices highlight the value of a well-managed and tailored retirement strategy that supports both business and individual success.
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