International Benefits

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Plaintiff Entitled to Benefits for Service While Covered by Affiliate's Foreign Plan.
Benefits & Compensation Legal & Legislative Reporter; v44 no2 p 8 Feb 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Bandak v. Eli Lilly and Co. Retirement Plan et al., the plaintiff worked from 1978 to 1995 for the defendant's British affiliate until he transferred to the U.S. and worked nine years more. He was assured that retirement benefits would be based on service since 1978. Under the plan in effect in 1995, the value of benefits payable through another qualified defined benefit (DB) plan was to be excluded. The plan administrator reduced the plaintiff's benefits by the value of benefits under the U.K. affiliate plan, seen as a separate qualified DB plan. Though plan documents were amended two years after the plaintiff's transfer to clarify such a situation, no provision addressing foreign plan benefits applied to the plaintiff. The Seventh Circuit Appeals Court upheld the district court's ruling for the plaintiff, including attorney fees and costs, and awarded attorney fees and costs for the appeal as well.
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U.S. Plans Lead 2009 Performance Parade.
Carter, Drew; Pensions & Investments; v38 no2 pp 3, 31 Jan 25, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Losses for U.S. pension plans averaged 25.2 percent in 2008 but gained 19.6 percent in 2009. This improvement outpaced gains in Australia, Netherlands, Canada, the U.K., Switzerland and Japan, ranging from 9.5 percent to 14.5 percent. Canada's plans averaged a 13.8 percent return, undermined by two percent inflation. Despite the downturn, few pension plans around the world significantly changed their asset allocations but are looking more closely at plan risk and governance, hoping to curtail volatility. Performance was driven by strong returns on stocks and bonds, but weak returns from alternative investments.
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Automatic Features in Defined Contribution Plans Are Gaining Worldwide Acceptance.
Compensation and Benefits Review; v42 no1 pp 13-15 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : According to a Mercer survey of organizations sponsoring defined contribution retirement plans in 33 countries, a third of employers offer automatic enrollment, a third automatic contribution escalation and more than one in five automatic rebalancing. Lifecycle funds were the most common default investment, used by two thirds of employers who used a default. The U.S. and Latin America led in the use of automatic features, with Asia-Pacific, Europe and the U.K. lagging. Matching contributions varied between one and over ten percent, with three out of ten respondents saying they limited company matches to six percent.
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Avoiding 401(k) ERISA Disasters.
Esposito, Jewell Lim; Compensation and Benefits Review; v42 no1 pp 39-45 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Several companies have violated IRS and DOL rules in ways that demonstrate many of the most common violations in 401(k) plans. The software company Quantum embezzled roughly $250,000 in employee pension contributions, a case of late deferrals, which is the most common 401(k) operational issue according to a 2010 IRS list. Property management company Fidel diverted participant loan repayments to its operating fund, a prohibited transaction under ERISA. Payroll provider Becker failed to withhold federal income tax for a number of expatriate workers of one of its clients and did not report any wages for some of those expatriates, resulting in a number of failures including the improper exclusion of some employees from antidiscrimination tests. Garment manufacturer Sylon forgot to contribute anything to the 401(k) funds of employees electing something other than the automatic contribution amount, which could be interpreted as either a failure to implement the election or an impermissible exclusion of employees from participating in the plan.
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Dual-Career Issues: Providing Help in a Time of Economic Uncertainty.
Cummins, Siobhan; HR Advisor: Legal & Practical Guidance; v16 no1 pp 19-22 Jan-Feb 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Economic uncertainty and the changing demographics of the expatriate population have made the issue of dual career couples, always a significant factor for prospective expatriates, even more important. Employers with expatriate assignees should be aware of the concerns of those assignees and their spouses or partners and review policy with those concerns in mind. They should also communicate with spouses and partners as well as assignees and offer support to those who want to work while abroad. Finding employment inside the company for a spouse wishing to work is an often overlooked option. By understanding partners' needs and providing reasonable assistance, employers can reduce the reluctance of dual career couples to accept international assignments.
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Social Security Coverage Extension: A Review of Recent Evidence.
van Ginneken, Wouter; International Social Security Review; v63 no1 pp 57-76 Jan-Mar 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Analysis of 13 research studies under the International Social Security Association project indicates possibilities for maintaining and extending social insurance in countries with low, middle and high income levels. Various sources suggest between 70 and 80 percent of the world's population have no meaningful social insurance and up to half lack health services. Stabilizing and extending social security depends heavily on national governments and the political will of the people. A key challenge is extending coverage to migrants and workers who constitute the informal economy. Providing coverage for these groups will likely require customized solutions for the target populations. Reforming existing formal sector benefits will not be sufficient to achieve universal coverage.
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The Public Pension System in Taiwan: Equity Issues Within and Between Systems.
Shao, Ai Ju; International Social Security Review; v63 no1 pp 21-36 Jan-Mar 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Taiwan's public pension system is comprised of five schemes for various occupational groups. There are concerns that the 1995 New Public Service Pension Fund System (NPSPFS), a defined benefit plan, undermines equity between generations and overall because of uneven wealth distribution. Further, rising costs undermine long term viability. To be equitable and workable, benefits must be tied to earnings and actuarial data. Possible reforms could change eligibility rules, lower benefits and end the lump sum benefit for public servants, teachers and military personnel. Other options could be a hybrid plan like the U.S. Federal Employees Retirement System, a cash balance plan or a plan like that adopted in Japan integrating civil servants' plans into the general pension scheme.
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Trends in Compensation for International Commuter Assignments.
Polovina, Samantha Blackhurst; International HR Journal; v19 no1 pp 9-10 Winter 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Commuter expatriates are those who live in one country but make frequent and regular trips to the same work site in another country, leaving family behind. According to ORC Worldwide's 2009 Survey of Short-Term International Assignment Policies, long term commuter assignments of a year or more are more common in Europe, where transit between countries is easier, than in Asia. Over half of respondents said either their human resources department or their global mobility department administered commuter employees. In general, respondents said they kept commuters on the home country pay and benefits structure, treated housing as they would for business travel and handled expenses through a per diem. Although commuter assignments are difficult to manage, they can offer a cost-effective means of balancing work and life for expatriates.
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Compensation.
Milkovich, George T.; Newman, Jerry M.; Gerhart, Barry; 689 pp 2010 10th ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : How people are paid is just as important as what people are paid. Discusses major compensation issues in the context of current theory, research and real-business practice, focusing on facts versus opinion. Explains how to craft a total compensation strategy and how to analyze the strategies used by competitors. Various forms of pay are examined, including the effectiveness and costs of the options. Ethics, values and standards of conduct in compensation are also explored.
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Balancing Act.
Stolz, Richard; Benefits Canada Across Borders; v1 no2 pp 1, 4 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Encompassing the aerospace and transportation industries, Montreal-based Bombardier employs about 55,000 workers spread across 60 countries. For its global benefits program, the company strives for locally competitive packages at the median for each region. Significant decisions on benefits packages must get corporate level compensation committee approval, but local divisional level changes are accepted if the division can support the cost and the change is consistent with corporate principles. The HR Council can approve some international benefits decisions, but there is no interest in micromanaging global benefits. Compensation decision makers keep attuned to trends and strategies used in other global locations and continually review offerings and cost sharing balances in context of corporate goals and resources.
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Employee Benefit Trends in India: Challenges and Opportunities.
Midha, Naveen Kumar; Benefits & Compensation International; v39 no5 pp 3-10 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Corporate India is challenged by the need to find and retain competitive talent, keep up with legislation and regulations and finance health care for employees. Most private health insurance is employer-funded, and nearly half of private medical insurance expenses go toward administrative costs. Medical inflation has soared. These factors combine with global currency rates, a growing population demanding more treatment and Western medicines, the growth of infectious disease and conditions tied to affluent lifestyles to exacerbate the problem. Changes in the insurance industry have ended the cross subsidization of insurance types, leaving health insurance severely underfunded. Employers must implement strategies to meet these challenges, starting with cost containment through redesign and consumer education.
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Employers 'Wait and See' on International Assignments.
Leonard, Bill; HR Magazine; v54 no12 p 7 suppl. Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A report by Brookfield Global Relocation Services finds that economic conditions in 2009 have led to nearly two thirds of multinational companies planning to send fewer employees on international assignments in 2010. Almost seven out of ten multinationals cut the costs of international assignments in 2009, compared to only 58 percent in 2008. The number of women on international assignments remained stable for the second year in a row at roughly 20 percent of all assignments. Top relocation destinations were China, the U.S., the U.K., Singapore and Switzerland.
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Master Plans.
Bauer, Gabrielle; Benefits Canada Across Borders; v1 no2 pp 7, 9 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : SNC-Lavalin is a construction and engineering firm with operations in Canada and more than 35 other countries. Most of its Canadian employees participate in a generous combined registered retirement savings plan and deferred profit sharing plan. The four U.S. business units operated separate pension plans until 2009, when a single harmonized plan was developed, still allowing business units flexibility. Standardizing plan designs for overseas divisions is more challenging. The international business groups are permitted to establish plans to suit their needs, with monitoring but without overt corporate direction, as long as they balance their income targets and costs.
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The Future of Multinational Pooling.
Adewumi, Adeolu; Benefits & Compensation International; v39 no5 pp 11-12, 14 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Broad changes are affecting multinational pooling, starting with expanding geographic representation for networks, moving from regional to global and consolidation of local players. The structure of networks, whether local partners are owners or affiliates, dictates how problems are handled. It is likely that a high level problem management system will develop regardless of location. Approaches to financial risk management must become more flexible and creative. Customer service, benefits administration and employee communication must be top notch, consistent and fully technology enabled. Local providers joining a global partnership must feel assured by lowest available, guaranteed and transparent costs, in exchange for giving up personal control and commissions.
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Cross-Border Employee Transfers: An Overview of Pension and Deferred Compensation Plan Aspects.
Bintz, Edward E.; BNA's Pension & Benefits Reporter; v36 p 2712 Nov 24, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : One of the major issues to consider for international employee transfers is the handling of pension and other benefits and their tax implications. The easiest solution for an employee moving to the employer's foreign branch or affiliate in the same controlled group is to stay under the U.S. employer's plan. If the affiliate is not in the controlled group, maintaining coverage can violate Internal Revenue Code Section 401(a)(2), though other ways to provide coverage are available. The case is less complicated for a foreign national transferring in, possibly requiring a simple plan amendment. Section 404 covers deductibility of employer contributions, but contributions made for expatriates are not usually permitted. An expat might switch to a local country plan or foreign national stay with his or her plan, but this may have negative tax consequences for the employee and plan sponsor. Taxation of employee distributions must also be considered. A foreign plan with many U.S. citizens or residents actually may be governed by ERISA.
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Practical Considerations for Making Global Equity Grants.
Wetzel, Susan A.; Compensation Planning Journal; v37 no11 4 pp Nov 6, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : U.S. tax considerations for equity awards can get complicated when even one employee lives and works outside the country. The design of an equity compensation plan should start by identifying the countries where employees are based and contacting legal counsel to review the plan document for local compliance. Favorable tax treatment in the other jurisdictions must not be assumed but confirmed. Specific features of the plan, such as vesting, forfeiture rules and stockholder voting, must be locally legal and enforceable. The plan document must give the employer flexibility in handling outstanding awards and new awards. Employers must take into account language differences when communicating the details of the equity awards.
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An Overview of the Health-Care System in Spain.
Matarranz, Ana; Benefits & Compensation International; v39 no4 pp 22-25 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Spain's public health system, started in the 11th century, was established in its constitution in 1978 to provide free care for all citizens. Social and economic changes in the 20th century and later stressed the financial stability of the system and led to the growth of a parallel private insurance sector. About a fourth of the population is covered by private insurance in 2009, a 3.6 percent increase in one year. About one-sixth also have health assistance cover, with fewer purchasing disability and dental insurance. Private health insurance is expanding rapidly, with a 15 percent increase in employer-sponsored benefits and ten percent growth in individual insurance in 2007. Private insurance is increasingly a complementary coverage source for the social security system.
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Equity, Target-Date Funds, & More Disclosures Top Sponsors' 'To Change' Lists.
Managing 401(k) Plans; no09-11 pp 11-13 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A Watson Wyatt survey shows 51 percent of plan sponsors actively switching elements in their 401(k) plans through 2009. Some added stock funds, but even more, 62 percent, eliminated them. The same is true on a smaller scale for international equities. Slightly more added fixed income choices than dropped them. One in five sponsors are changing aspects of their lifecycle funds. Sixty-two percent plan to be at least somewhat more stringent about their plan governance. Forty-three percent intend to provide participants with more information disclosure, and 30 percent are renegotiating fees with outside service providers.
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Executive Remuneration and the Latest EU Recommendation.
Marchettini, Piero; Benefits & Compensation International; v39 no4 pp 3-4, 6-9 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : After decades of soaring executive compensation, public outcry combined with the 2008 global recession to prompt efforts at regulatory control in numerous countries. Compensation committees struggle to balance effective pay for recruitment and retention against shareholder interests and public sensibilities. Recommendation 2009/385/CE is the European Commission's response to questionable executive pay. It deals with incentive pay, severance, stock plans, disclosure of pay package details, compensation committees and shareholder input. Besides drawing attention to pressing issues of executive pay, the Recommendation highlights the importance of executives' and directors' management decisions.
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Global Benefits Management: Maintaining a Competitive Edge in Multiple Countries.
Bethea, Rudy, Jr.; Employee Benefit Plan Review; v64 no5 pp 22-23 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Businesses looking to develop their global workforce may be struggling to find cost effective recruitment and talent retention strategies. A global approach to benefits requires a diverse set of benefits offerings to deal with differing government mandates and cultural factors between countries. One way to ensure the fairness and relevance of a global benefits plan is to obtain extensive benchmarking data on benefits across countries. An effective global benefits strategy must not be treated as an add-on responsibility for existing human resources teams and must receive support from upper management.
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On Foreign Ground.
Shafer, Rebecca; Risk Management; v56 no9 pp 48, 50, 52 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : For expatriate employees working outside the U.S. for more than a few days, workers compensation, liability insurance and other types of insurance are key sources of protection that should not be overlooked. Coverage and carriers vary by location. A letter with details of the employee's assignment should facilitate claims processing. International insurance policies should address all aspects of automobile insurance including provisions for emergency return to the home country for medical care and disposition of remains. Other issues to consider include safety evaluation of the locale, travel medical care, international general liability insurance, kidnap and ransom insurance, and coverage required by the Defense Base Act for nonmilitary workers.
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Pension Funds in a Highly Politicised Environment: The Case of the Philippines.
dela Rama, Marie; Pensions; v14 no4 pp 242-258 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Philippines' Government Service Insurance System serves public sector workers, while the Social Security System provides for private sector employees. The government owns the funds and is responsible for asset investment. Political leadership, appointments and events strongly influence investment choices, often at the expense of maximum investment performance. It has become entrenched customary practice for the heads of both funds defer to the wishes of political leaders, overriding documented charters and investment policies. Politicization is the major obstacle to effective functioning of the two pension systems and the government as a whole.
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Pension-Sector Reform: Uganda in the Context of the EAC.
Stitt, Nigel; Dunn, Peta; Benefits & Compensation International; v39 no4 pp 15, 18-21 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The East African Community (EAC) was formed in 2000 to encourage cooperation among member countries in economic and other matters. The treaty establishing the EAC did not address integration of the insurance and pension sectors, but a 2009 agreement urges development of a strategy to reform and consolidate regional pensions. Uganda's only pension regulation is the National Social Security Fund (NSSF) Act, and the Uganda Insurance Commission oversees insured pension funds. Self administered funds are registered but not regulated. Employer-sponsored benefits are rare and mostly defined contribution plans. Uganda gives little tax advantage for savings beyond the NSSF. Uganda's Social Security Stakeholders Transition Group, established in 2004, has proposed legislation to transform the social security and pension sector, modeled on Kenya's system, adding momentum to regional reform.
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Pensions in Australia and South Korea: A Comparative Analysis.
Gordon, Isabel; Lee, Jung-wha; Pensions; v14 no4 pp 273-281 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Demographic and social changes in Australia and South Korea have prompted significant revision in approaches to pension arrangements and their accounting. Australia started compulsory employment-sponsored pensions in 1991, followed by South Korea in 2005. In 2005 Australia adopted international financial reporting standards, overhauling their approach to pension accounting and exposing the financial details. The transition provides a model for South Korea as it moves to international standards starting in 2009. Among Australia's top 200 companies, defined contribution (DC) plans predominate, emphasizing the need for individual financial literacy. As South Korea transitions from its retirement allowance plans, moving toward defined benefit plans entails complex accounting, financial disclosure and actuarial issues. If the country follows the preference for DC plans, it avoids those issues and the greater need for financial literacy.
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Pensions Reform in the European Union: Recent Developments After the Implementation of the IORP Directive.
van Meerten, Hans; Pensions; v14 no4 pp 259-272 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In 2005 the European Union adopted the Institutions for Occupational Retirement Provision (IORP) Directive, covering regional pension plan activity and supervision. Challenges for IORPs come from their legal status, relationship with insurance companies, ringfencing and cross border activities. Legally, IORPs are prefunded entities to provide labor-related retirement benefits through employment but independent of a sponsoring employer. Ringfencing pertains to segregating sets of assets and liabilities in different pension schemes, complicated by national regulations that often differ from the Directive. The document also details the complex issue of cross border activity, differentiating the location of a plan's establishment from where it provides services.
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