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.

Plan Administration Sourcing: The Deutsche Post DHL Story.
Jereb, Christopher; von Schonfels, Constantin; Schmalhofer, Andreas; Sorensen, Arthur; Compensation and Benefits Review; v42 no4 pp 247-255 Jul-Aug 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : When Deutsche Post DHL moved to a global equity compensation scheme, it sought to outsource the plan management. Its sourcing process started with a demand analysis, defining the project, baseline status and projected evolution. In its supply analysis phase, the firm identified potential service providers through a request for information. It then developed its sourcing and negotiation strategies, issued a request for proposal and narrowed the field of candidates through scores for capability and competitiveness. Once a vendor was selected, final details were clarified and the contract negotiated and closed. The implementation included tracking of benefits and compliance reporting. The extensive and complex selection process generated worthwhile lessons for others pursuing plan administration outsourcing.
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Salary Increase Budgets: 2010 Updates and 2011 Forecasts.
Report on Salary Surveys; no10-7 pp 8-9 Jul 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Actual salary budgets for 2010 fell short of projections made in late 2009. Data from Compdata Surveys on service firms show a 2.2 percent budget increase in 2010, down from the 2.5 increase of 2009, but a forecast of 2.5 percent for 2011. Accounting and engineering firms show the highest increases, with media firms at the bottom. Culpepper and Associates found global salaries increased by only 1.9 percent from September 2008 to September 2009, relative to 4.23 percent the previous year. Companies freezing all salaries rose to 37 percent, but by March 2010 70 percent of them planned to unfreeze those salaries. The U.S., Canada and the euro zone have seen lower but less volatile salary increases than other parts of the world, especially South America and Africa.
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Strategic Moves.
Testa, Bridget Mintz; Workforce Management; v89 no7 pp 23-24, 26 Jul 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The global economy has changed the ways employees and employers look at relocation, considering how it balances with many other factors. The demand has surged for predecision services which analyze all the costs for both parties. A major factor in relocation is current home equity, which may be helped by an employer's covering part of the loss on sale. Companies are increasingly turning long time expat employees into local workers. Salaries do not change, but special expat benefits disappear. Localization has usually been accomplished as a gradual phased process, but there is more effort to speed up the process or make it an immediate change, softened with a transition payment.
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Why Blue Lake Casino Added Medical Travel to Its Benefits Plan.
Managing Benefits Plans; no10-7 pp 9-11 Jul 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : At a health benefits conference, the HR director of Blue Lake Casino & Hotel in California explained the company's adoption of medical travel to expand benefits and lower overall costs. Blue Lake identified strong financial reasons for using medical travel and realized that six targeted procedure costs abroad run about one-fifth of the cost in the U.S., saving the health plan and the employee paying a copayment and deductible. The firm explored compliance with quality and accreditation standards and made site visits to assure a good support and recovery environment. Blue Lake followed American Medical Association guidelines and attended to contractual technicalities and liabilities. It then modified the plan documents and started promoting the benefit. For procedures done in 2010, the company will fully cover surgical and travel costs and provide a ten percent stipend.
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Worldwide Assets Rebound 18% in 2009.
Appell, Douglas; Pensions & Investments; v38 no13 pp 3, 16-18, 27-28 Jun 28, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : According to an annual Pensions & Investments survey of the 250 largest money managers, total pension assets worldwide were $36.7 trillion at the end of 2009, up 18 percent from the previous year. The number of managers with $1 trillion went from six to eight, tying a 2007 record. In the wake of dramatic 2008 and 2009 market swings, firms focused on fixed income and passive strategies were among the strongest. Other firms gained assets as a result of the continued trend toward defined contribution pension plans over defined benefit plans. Money managers expect sovereign wealth funds and central banks, accounting for over $800 million in 2009, as well as insurance companies, to be increasingly important sources of business in coming years. Ranks 710 global investment managers.
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Across Seven Continents in Six Steps.
Carey, Doug; Smith, Dave; Employee Benefit News; v24 no8 pp 12-14 Jun 15, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Multinational firms can effectively manage global benefits by following six steps. Firms should begin by establishing a global governance model with a centralized project management office. They should create a global inventory of benefits programs offered, define the objectives of the global program and of key individual markets, and establish a series of metrics and a means of reporting important program data. Using the inventory, firms should eliminate vendors not offering value to the program and build relationships where savings can be achieved. Finally, firms should define and implement a strategy for communicating the global plan to employees.
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Employment Conditions in Jordan.
Samawi, Faris; Benefits & Compensation International; v39 no10 pp 16-17 Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Primary goals of the Jordanian government are to provide education and health services for its people. This philosophy has led to a large proportion of Jordanians seeking work in the U.S., Europe and the Middle East and sending money home. The country has become attractive to university students, helping to expand the pharmaceutical sector and other industries and increasing the value, sophistication and complexity of exports. Once public industries are ripe for privatization and foreign investment, while family businesses expand and become more formalized with greater appreciation of the central role of human resources management. There is growing interest in total rewards, performance-based compensation and providing incentives for employee retention.
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Permissible Offshore Funding Arrangements for Nonqualified Deferred Compensation Plans Under Treasury Regulation Section 1.409A-1.
Vishnepolskaya, Marina; Journal of Deferred Compensation; v15 no4 pp 27-48 Summer 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Internal Revenue Code Section 409A(b)(1) adds to Section 409A a provision banning offshore funding for nonqualified deferred compensation (NQDC) plans. It was intended to prevent putting aside NQDC funds to an offshore rabbi trust, though there are limited exemptions for arrangements not serving a deferral of compensation or not a nonqualified deferred compensation plan under Section 409A. The exceptions benefit employees working permanently in one or more locations outside the U.S. for most of the year. For third country nationals and internationally mobile employees, the exemption is limited to nonelective deferrals. The IRS provision penalizes multinational companies seeking to maintain trusts outside the U.S. to fund NQDC plans and generally limits their NQDC planning.
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The Successful Management of Benefits Costs and Risks.
Hill, Jeremy; Benefits & Compensation International; v39 no10 pp 18-22 Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Benefit management for a multinational company must consider the size of the company and its workforce, degree of centralized control, multiple monetary issues and other demands. A benefit management strategy should be tailored to the company but may be similar to three approaches offered as illustration. A micro multinational firm may take advantage of cross border policies and use outsourcing to support its workforce. A traditional multinational may build several multinational insurance pools with a network of benefits brokers and consultants. A third strategy relies heavily on the procurement department to handle high cost purchases and contracts for all providers, working with HR. A fourth option considers benefits from a risk management perspective, possibly using a captive insurance approach and local insurers for reinsurance.
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Two Surveys Examine Pay for Sales and Marketing Positions.
Report on Salary Surveys; no10-6 pp 9-10 Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A 2009 Pragmatic Marketing survey found product managers averaged $98,017 in base pay, and 77 percent received bonuses averaging $12,360. One in four managers said bonuses, primarily based on company profit, were not a strong motivator. Product managers in the Pacific states received the highest salaries, followed by the Northeast, with the lowest pay in the Midwest, though pay ranged widely within regions. A Go-To-Market Strategies poll also found salary was the primary source of compensation with commission providing variable incentive pay. The mix of salary and incentive varies with position, with the salary the largest component of managers' pay coming, while incentives are stronger for salespeople. Product manager pay is highest in the U.S., followed by Australia, Canada and Europe.
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Variable Compensation for Bankers: French Employment and Tax Law Aspects.
Le Men-Tenailleau, Stephanie; Leger, Nicolas; Benefits & Compensation International; v39 no10 pp 10-12 Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The French Banking Federation and federal government agreed on a 2009 regulation affecting variable compensation for banking professionals whose activities are likely to expose their company to significant risk. The compensation must be based on individual or team goals, tied to total operational costs and profits and have specific objectives. Any guarantee of payment is banned except for professional recruitment. Compensation can be given as partial payments over three years or more but must be conditional on performance. It can be given as shares or indexed instruments tied to increased long term value and valued on the date of award. The tax for variable compensation over 27,500 euros is 50 percent, due in the tax year of payment or vesting, and applies as well to awards granted by a foreign parent company or subsidiary.
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Accounting: IASB Issues for Comment Exposure Draft Revamping Defined Benefit Plan Accounting.
Bouvier, Stephen; BNA's Pension & Benefits Reporter; v37 p 1031 May 4, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The International Accounting Standards Board (IASB) is proposing to amend Standard 19, targeting deferral strategies and recognition of defined benefit plan obligations. Since the Securities and Exchange Commission intends to align the U.S. generally accepted accounting principles with the international standards, any IASB move would affect publicly held U.S. companies. The IASB proposal would require defined benefit plan sponsors to present service costs as profit or loss, finance costs and remeasurement components in a single comprehensive statement. Presentation of finance costs and plan administration costs will demand special attention. Under other proposed amendments, plans will also have to detail its defined benefits, risk linked to the obligation and participation in multiemployer plans.
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Investments: Mutual Fund Assets Make Up 25 Percent of Retirement Plan Savings, ICI Report Says.
BNA's Pension & Benefits Reporter; v37 p 1030 May 4, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Investment Company Institute (ICI) reported that at the end of 2009, $4.1 trillion of the $16 trillion in retirement savings assets were invested in mutual funds. Most of these assets were in IRAs or defined contribution plans. Over half of 401(k) plan assets and 46 percent of IRA assets were invested in mutual funds. Asset levels for 2009 were 14 percent higher than in 2008 but 11 percent lower than 2007 levels. At the end of 2009, 58 percent of allocations were in domestic or international stocks. There was $256 billion in lifestyle funds at the end of 2009, mostly held in IRAs and defined contribution accounts. Fees for plans with mutual funds were relatively low due to lower-cost fund choices and fewer transactions.
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Borders and Benefits 101.
Peros, Rosemary; Benefits Canada Across Borders; v2 no2 p 11 May 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Employers with a global workforce may want to provide equitable benefits to all employees, but they should be aware of wide variations in national norms and accepted practices. While the simplicity of a unified and consistent benefit program has appeal, policies and benefits tailored to each country may be more appropriate. Canadian expatriates expect the same or comparable benefits as those offered in Canada. Local nationals and third country nationals do not usually qualify for a Canadian benefits program. Canadian employees crossing the border to the U.S. can stay on the Canadian plan, but U.S. workers in Canada must be served by a U.S. benefits provider. Canadian employers should understand the regulations and culture where their employees work and should seek advice from an experienced international benefits consultant.
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Dependent Care in the New Economy.
Leibow, Cathy; Employee Benefit News; v24 no6 pp 50-51 May 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : One lesser known effect of globalization is its impact on employees with caregiving duties in other states or countries. A growing population of employers has to take time away from work to care for elderly dependents. According to a MetLife study, U.S. employees caring for an older relative are more likely to report health problems, costing employers an additional eight percent annually. Employers wishing to aid employees in dealing with dependent care issues should consider providing dependent care resource and referral programs, national and international geriatric care management programs, employee education programs and training for managers in handling employees with dependent care duties.
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Desirability of Private Pension Plan Supplementation in Argentina.
Deza, Diego; Bukschtein, Fabian; Benefits & Compensation International; v39 no9 pp 12-13 May 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In 1994 Argentina implemented the Integrated System of Retirement and Pensions, combining pay-as-you-go social security with a privately managed defined contribution scheme. Because of its salary replacement cap, it did not serve highly compensated employees well, and private pension plans grew. The national plan was ended in 2008 with the global financial crisis, and the government nationalized the entire pension system to protect participants. But the revised system as structured is unsustainable. It suffers from an actuarial deficit, politically motivated state management of funds and a high level of litigation. To succeed, the plan will need significant legislative action and tax revision.
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Everyone Into the Pool: Multinational Pooling for Small Groups.
Shimer, Paul; Harrison, Tom; Benefits & Compensation International; v39 no9 pp 3-6 May 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Multinational pooling, introduced by AIG in 1954, enables employee benefit plans to combine claims experience with other plans in the pool. A positive balance is shared as an international dividend, while a deficit is carried forward or handled through stop loss insurance. Depending on claim experience, pooling can lower premiums up to 15 percent. Certain insurance networks are turning more to small and mid sized multinational organizations. A survey compares AIG, All Net, Generali, IGP, Insurope and Swiss Life on aspects of multinational pooling design and delivery. Each provides a small group pool and seeks new business from small group pooling.
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Global Tax Treatment of Equity Awards.
Tax Adviser; v41 no5 pp 306, 308-309 May 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : With the U.S. adoption of accounting standards requiring stock options to be expensed, many multinational employers are offering equity alternatives such as restricted stock, stock appreciation rights and indexed options to their global workforce. Other countries have enacted new laws in 2009 and 2010 that further complicate global equity rewards. Italy eliminated its exemption from income tax for qualified stock options. India radically simplified its income tax withholding scheme. Australia reduced the circumstances under which an employer may defer tax liability. China has provided clarification and guidance on its tax treatment of stock options and related equity compensation.
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Proposed Amendments to IAS 19: Accounting for Employee Benefits.
Hewitt Global Report; pp 1-6 May 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The International Accounting Standards (IAS) Board issued an exposure draft proposing changes to IAS 19. The amendments call for recognizing and presenting changes in defined benefit (DB) plan obligations and assets, other DB plan disclosures and other issues. The IASB seeks to have all actuarial gains and losses fully accounted for in the period when they occur rather than deferring their recognition. Net investment interest income or expense would have to be reported in the profit and loss section of a performance statement. Organizations would have to fully detail the financial characteristics of their DB plans, its risk management, governance and other features. The amendments bring IAS 19 closer in line with U.S. GAAP and U.K. accounting standards.
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The Changing Face of Reward: Key Drivers in Today's Reward Programs.
McMullen, Tom; Reigel, Bill; Journal of Compensation and Benefits; v26 no3 pp 25-29 May-Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Research on trends in compensation reveals the effect of the global financial downturn. The Hay Group studied 230 firms, half in Europe, one-fourth in Asia and one-fifth in North America from late 2009 to early 2010. They found recruiting and retaining key personnel to be a primary focus in the evolving compensation strategy. Next is the search for ways to balance adequate employee compensation with the total cost of that compensation for employers. Pay for performance is a critical and rising factor in the compensation strategy, creating the need to establish valid performance metrics, communicate them to employees and managers and support managers in evaluating performance. The concept of total rewards should be communicated clearly and frequently.
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Intercontinental Warfare.
Davis, Andrea; Employee Benefit News; v24 no5 pp 12-13, 15 Apr 15, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Power delivery company National Grid is headquartered in the U.K. and has 18,000 employees in the U.S. As a wellness promotion, the company worked with Shape Up the Nation, a wellness company that uses the power of social networking to encourage healthy behavior and weight loss. The National Grid program pitted about 700 teams from the U.K. and U.S. against each other to see which side could walk across a virtual Atlantic Ocean first. The 12-week program got about 5,500 employees up and walking, socially involved and competing in a fun event without using financial incentives. Though the direct impact on health and claims is unknown, participants' responses have been strongly positive.
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A Tear in Japan's Safety Net.
Clenfield, Jason; Business Week; no4173 pp 60-61 Apr 12, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : When the Japanese government started permitting companies to cut retiree pensions in 2002, few firms took up the offer until Japan Airlines went bankrupt in early 2010, followed by Mitsubishi Heavy Industries. With the financial pressure coming from a change in accounting rules to take effect in 2012, several other firms are likely to follow suit. About 60 percent of Japanese employers' pension plans are defined benefit plans. Employees express conflicting emotions about possible benefit cuts. Some feel loyalty toward their former employer, but others feel betrayed and bullied under pressure to accept reduced pension benefits and overhaul their retirement plans.
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A Singapore Medical Solution for Local Foreign Hires.
Frener, Christian; Buhler, Martin; Benefits & Compensation International; v39 no8 pp 3-4, 6 Apr 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : To meet staffing demands in a newly opened office in Singapore, a Swiss bank hired a number of third country and local nationals. The employer chose an international medical insurance provider for benefits portability, option for treatment in the home country and equivalent coverage for all eligible international employees. The bank considered employees' and the employer's criteria and narrowed options to four international private medical insurance candidates. Though service offerings were comparable, there was wide variance in premiums. The final choice was DKV Globality due to premium stability, local expertise and claims center, large local provider network, comprehensive benefits and assistance services.
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Retirement in the Future: Focusing on the Payout Period.
Rappaport, Anna M.; Siegel, Steve; Benefits Quarterly; v26 no2 pp 20-29 2nd Qtr 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Many people prefer a lump sum pension plan payout at retirement but are then challenged to manage the funds effectively to last through their retirement years. The Society of Actuaries looked at international practices in benefit payment methods, including the lump sum payout common in the U.S., combination approaches and mandated life annuities. In countries where lump sum payments dominate, the concern is using up assets too quickly. Individuals base decisions on managing their funds on immediate need, financial education and the economy. Following the financial crisis of 2008, retirees with defined contribution account balances feel less secure and confident about finances and spend more conservatively. Employers can help by providing information geared to retirement proximity. Pension payout decisions are pivotal and demand more attention from plan sponsors and policy makers.
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Revisiting Contributory Defined Benefit Plans: An Old Idea Whose Time Has Come (Again?).
Mikhitarian, Michael C.; Wukitsch, John B.; Benefits Quarterly; v26 no2 pp 13-19 2nd Qtr 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The part played by employee contributions toward their retirement income has evolved with economic conditions over the years. The Great Depression forced early noncontributory plans to include some cost-shifting within a contributory defined benefit (DB) plan. That role grew in defined contribution plans but is showing signs of swinging back to an updated model of contributory DB plans offering some amount of guarantee. The economy of 2010 is similar to that of the 1930s when contributory DB plans started, and cost-sharing has become the norm. With employees sharing the costs of a contributory DB plan, benefits are guaranteed. Disadvantages for plan sponsors include funding volatility and a bigger administrative burden, and employee contributions are taxable. The DB(k) plan, available as of 2010, is a step in the right direction but does not assure benefits and has limitations. A contributory DB plan may be a better option.
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