HQ Weighs in On Local Retirement Plan Decisions

January 22, 2001 (PLANSPONSOR.com) - More than half of multinational companies are weighing in on local retirement plan investment decisions - and nearly three-quarters of those not doing so are making plans to, according to a new survey.

The survey by William M. Mercer Co. LLC, found that 51% of US multinationals and 56% of non-US companies already exercise some form of corporate involvement or oversight of local plan investment decisions, according to the Wall Street Journal.

Benefits Strategy

The study identified several benefits of the strategy, including:

  • lower costs resulting from greater economies of efficiency and scale
  • reduced risk by balancing co-related market risks
  • higher returns due to the application of best practices and asset management expertise

The most common areas of retirement plan involvement include:

  • 63% – Benefit funding policy, due to rise to 91% involvement over next two years
  • 60% – Investment objectives and strategy, due to increase to 87% over next two years
  • 51% – Investment manager selection, expected to rise to 75% in two years.

Mercer received responses from 83 multinational companies with total global pension assets of $400 billion. Of those, 48% are headquartered in the US, 19% are in the continental Europe, 19% in the UK, 7% in Canada, and 7% elsewhere.

– Nevin Adams      editors@plansponsor.com