Mutlinats Seeing Changes in Pension Oversight

November 29, 2004 ( - Multinational companies are bending to the pressures of pension and benefit obligations with many increasing the executive office's control over such programs and more often including the finance office in benefits decisionmaking.

According to a study by Towers Perrin, corporate headquarters are exerting a greater influence over benefit management in 51% of companies in the “Managing Employee Benefits Globally: Today’s Increasingly Disciplined Approach” survey. Forty-five percent of those surveyed also said that they were seeing a greater influence by the company Finance Department in the pension arena.

This increased influence of central business officials should not be surprising when the size of pension obligations is considered. Twenty-six percent of multinational companies surveyed report that their pension liabilities are more than 25% of their market capitalization, while 3% report that it is more than 100% of market cap. Thirty-one percent of companies reported that they have more than 50% of their liabilities outside the headquartered country.

In response to this growing obligations and the complex management systems that surround them, 70% of companies have established central committees or management teams to oversee pension and other employee benefits across borders. Multinational pooling arrangements are a common way of financing pension obligations, with 58% of companies reporting that they use this system. Captive insurance structures were cited by 20% and the management technique used to manage global benefits.

The hiring of actuaries by global companies in order to improve information and insight is also on the rise. Thirty-four percent of companies stated that they already had a global coordinating actuary, while 6% thought they would hire one in the next 18 months. An additional 14% state that they are considering appointing such an actuary.

Towers Perrin ( ), a global professional services firm, has offices in 24 countries. Its survey, covering 134 global companies, is available here .