A growing number of multi-national companies are embracing a globally-coordinated approach to managing their retirement plans. They recognize that firms with comprehensive well-being programs deliver better overall financial performance1 - and want to bring the best thinking and committed governance to every place they do business.
To help, BlackRock has created a framework for global retirement principles and governance for multi-national employers.
Establishing global principles for plan design, investments and structured oversight can lead to more consistent policy, better risk management and organizational efficiencies. It may also yield potential cost-saving by leveraging the bargaining power that comes with larger pools of assets and benefit management.
Setting strategic objectives
It’s important to begin developing your global retirement principles by setting strategic objectives that capture your retirement plan vision. For example, your organization may seek to provide retirement benefits that are:
| Valued by employees as a key component of the ”total rewards” package | Competitive in their respective industry | Globally aligned but reflective of local practice and regulation |
| Compliant with all applicable regulations | Economically sustainable for the company, while maximizing the company’s investment | Designed and administered to allow employees to meet their retirement goals |
Designing global retirement principles
You can help your organization build global alignment by grouping key components into categories. The example below shows how categories can provide a single lens for examining related issues.
Governance and decision making
Similar to the approach for developing the principles, establishing global governance should start with articulating your objectives for doing so. Potential objectives could include:
- Global alignment and adherence to strategy for providing retirement benefits.
- Increased transparency of global plans.
- Clear understanding and monitoring of fiduciary and financial obligations.
- Creation of a process to ensure that plans are reviewed and updated regularly.
- Guidance and consistency in decision making.
- Potential collaboration and negotiation on service arrangements and investment menus.
- Forum to address inquiries, concerns and needs.
Governance objectives
Global retirement plan principles aim to provide useful guardrails, while recognizing country specific application will vary for a variety of reasons. Robust retirement plan governance is a critical part of strategically managing a company‘s growing global footprint, and can lead to better risk management and operational efficiencies.
1January 2016 issue of the Journal of Occupational and Environmental Medicine. Study tracked stock performance of three portfolios of employers after receiving awards for their employee wellness program or self-scored themselves as having a comprehensive program. In all three cases, award winners or those with high scores outperformed the S&P Index at rates ranging from 7% to 16% per year.
*BlackRock, 3/31/18
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