A Mercer news release said shortfalls in employee understanding of how much to save and how to invest that savings are becoming more of a problem as more responsibility for retirement is put on the individual with the continued growth of defined contribution plans, which Mercer said are “becoming the norm.”
“With participation optional and contribution level left up to the employee, many employers are finding that individuals contribute less, start contributing late, invest conservatively and retire too soon,” Mercer wrote.
The study also found:
- Many multinationals have explicitly stated they will go exclusively with DC plans in the future. While several countries still have predominantly defined benefit (DB) plans (South Korea, Philippines, Japan, Canada, Mexico, Belgium, Israel, Netherlands), “it is rare for an employer to set up a new one anywhere in the world. Reductions in Social Security benefits and talent wars are raising employee expectations for improved, portable employer-provided benefits, but employers are not rushing to meet this need,” Mercer wrote. “Unless supplemented by personal savings, many employees are likely to find their benefit plans cannot deliver sufficient retirement income to ensure a comfortable retirement at the age the employee might expect.”
- The concept of retirement is changing and many will be forced to postpone full retirement.Many governments are extending the retirement age, as an aging workforce means that the pool of retirees is growing faster than the number of productive workers who contribute to state or private-sector sponsored retirement programs.
The Mercer poll of employers in 48 countries also focused on the continued climb of health care costs as another employee benefit difficulty multinationals face.
Mercer said employer challenges relating to health care benefits include: an employee demand for state-of-the-art health care when private employers are scrambling to deal with the rising costs, that workers of different ages and circumstances differ on the value of certain benefits, and that lifestyle diseases are "straining health care budgets."
class="NormalIndent2"> Global governance is on the rise to ensure compliance and competitiveness in all markets in which a company operates.There is a pronounced trend toward more global corporate oversight of benefit programs, according to Mercer.
More information is available at www.mercer.com/bpaw .