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.

A Review of Time Accounts in Germany.
Moormann, Hartmut; Benefits & Compensation International; v38 no3 pp 10-16 Oct 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The German langzeitkonten or time account is a method of saving credit for overtime hours for later use rather than as immediate payment. The credited time might be used for long term leave, child care or early retirement. Older workers who have saved time credit can be released from work before reaching Germany's retirement age of 67 years. The approach lets employees modify their hours during different life stages, and the employer can better handle fluctuating labor demands. Taxes on the hours are delayed until the hour credits are used. In 2005 long term accounts were used by 6.8 percent of companies, representing 18 percent of all employees. Those companies tend to be large, financially stable and needing labor flexibility.
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Between Labour Market and Retirement Pension: Flexible Transition as a New Paradigm for Ageing Societies?
Bredt, Stephan; International Social Security Review; v61 no4 pp 95-112 Oct-Dec 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Though raising the standard retirement age can reduce liabilities, it is an unpopular solution with workers. In 2007, Germany raised the pensionable age to 67, but the change is unlikely to produce the desired result. There are discussions among German policy makers about lowering the age to 60 years while permitting early retirees alternative ways to continue earning income and pension credits. Credits would be managed in notional accounts for eventual annuities, and payments would reflect life expectancy. Such a change would offer flexibility and individual choice while stabilizing the financial status of the pension system.
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How Employers Can Leverage Human Capital in Central America.
Gaitan, Wil J.; Benefits & Compensation International; v38 no3 pp 3-9 Oct 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Guatemala, Belize, Honduras, El Salvador, Nicaragua, Costa Rica and Panama present an aggregate population of 38 million, many below working age. Except for Costa Rica, the countries are losing population to migration, creating a net drain on qualified employee talent and competition in recruitment. Local economies are on the rise and present growing opportunities for offshore labor. Foreign companies may become full legal entities with a traditional employment model, benefits and social security obligations. Some take the simpler approach of using independent contractors or labor intermediaries, though these are subject to other regulations and involve some disadvantages.
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Notional Defined Contribution Pensions With Public Reserve Funds in Ageing Economies: An Application to Japan.
Lu, Bei; Mitchell, Olivia S.; Piggott, John; International Social Security Review; v61 no4 pp 1-23 Oct-Dec 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Researchers studied how well a notional defined contribution (NDC) system could meet Japan's obligations to the growing number of pensioners. The NDC system features individual accounts with retirement benefits delivered as annuities funded relative to a worker's contribution history, the birth cohort's anticipated mortality and investment performance over the cohort's time frame. Using Japan's existing reserves and governmental subsidies, the approach would be more successful than the two existing pension systems. While current workers support immediate obligations for the elderly, the reserves applied to an NDC system would support the transition from the pay-as-you-go approach and provide sustainable funding for the future.
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The Changing US Retirement Landscape: A Shift to Individual Responsibility.
Haendiges, Brian; Benefits & Compensation International; v38 no3 pp 18-21 Oct 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The retirement paradigm in the United States is changing, prompted primarily by rising longevity and health costs. The challenge is not limited to this country but is global, with variations from country to country. The majority of U.S. workers control their own retirement financing, though they are too often unaware of realistic needs and see poor investment success. The supportive provisions of the Pension Protection Act provide some help. While the landscape is changing, the basic foundation of the employer-employee relationship is likely to remain. The primary responsibility for retirement planning and income has moved to employees, but employers are responsible for providing tools to facilitate planning success.
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Corporate Governance in Europe: The Remuneration Committee and Disclosure.
Marchettini, Piero; Benefits & Compensation International; v38 no2 pp 3-12 Sep 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In 2008, Europe is reacting to a number of corporate governance and executive compensation scandals. Despite the diverse nature of these scandals, the typical response from shareholders is to demand greater accountability, judgment and transparency from board members. Best practices call for board members to involve themselves knowledgeably and responsibly in executive compensation, benefits and employment practices. Most corporate governance codes recommend that boards set up special remuneration committees to deal with executive compensation issues. Pay disclosure may be either a marketable advantage or a public embarrassment. The Institut Francais des Administrateurs has offered recommendations on the structure, membership, responsibilities of remuneration committees and nomination of corporate executive directors.
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Deferred Compensation Nonqualified Employee Benefits: Their Global Effect: IAS, FAS and Harmonization.
Bell, Lawrence L.; Journal of Compensation and Benefits; v24 no5 pp 5-20 Sep-Oct 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Since the 1990s multinational employers and international accounting boards have been trying to standardize deferred compensation and other retirement benefits. The Financial Accounting Standards Board, the International Accounting Standards Board and several leading countries have tried to reach consensus on standardization. Given the scope and complexity of the issues, some think the goal should not be standardization but rather harmonization. Instead of a one-size-fits-all approach, it might be more effective to demonstrate approaches that work for some that could be modified for another country's needs.
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Falling off the Radar Screen: Communication Challenges With International Assignees and Managers.
Herod, Roger; McMorrow, Virginia G.; International HR Journal; v17 no4 pp 11-12 Fall 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : It is challenging but essential to stay in touch with company workers on international assignments. Surveys are useful to reveal their satisfaction level, opinions and suggestions. Questions must be well designed to reveal important information that can strengthen the international program for current and future assignees. Items might ask about satisfaction with the total assignment arrangement, perception of HR and managerial support, satisfaction with service providers and likelihood of taking future international work. Surveys should provide the opportunity for open comments. Respondents should feel listened to with feedback leading to real results.
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International HR Best Practice Tips: "Floating" Employees Working in Overseas "Permanent Establishments".
Dowling, Donald C., Jr.; International HR Journal; v17 no4 pp 3-7 Fall 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Organizations with just one or two employees working in another country may want to avoid setting up formal licensed and registered operations. But by setting up the expatriate as a floating employee, the employer risks violating host country laws. Arrangements may skirt requirements for commercial registration and corporate income tax as well as labor immigration laws. Employers may consider seconding the expat with a local company or have the expat work as a consulting independent contractor. But even these arrangements border on permanent establishments liable to taxes and other employment regulations.
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Specified Employees Under Section 409A.
Bokert, Mark E.; Employee Benefit Plan Review; v63 no3 pp 5-7 Sep 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The six month delay rule of Internal Revenue Code Section 409A requires that a worker meeting the definition of specified employee must wait six months after separation for severance payment. A specified employee is typically a very highly compensated individual working for a publicly traded company, subsidiary or affiliate. Applicable compensation minimum points can be based on W-2 entries, wages or other data. Employers should establish a rolling list of specified employees each year, ready to check if one leaves employment. Having identified specified employees, employers must amend compensation packages by the start of 2009 to incorporate the six month rule and inform those affected.
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The Dollar Dive: How U.S. Expatriate Programs Are Addressing Issues Relating to the Falling Dollar.
Cole, Clarissa; Mullaney, Eileen; Samson, Merrilou; International HR Journal; v17 no4 pp 31-33 Fall 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The plunging U.S. dollar is prompting reassessment of international assignments. Companies with compensation packages based on U.S. currency are considering splitting payroll delivery to rely more on local currency and reviewing expatriates' allowances much more frequently. HR must consider how fluctuating exchange rates factor into compensation and benefit obligations and whether to establish an exchange rate guarantee. Tax liabilities are likely to rise since employers must convert expatriates' income to U.S. dollars at the rate in effect when taxes are paid. Through the economic turmoil, companies must keep expats happy and focused on their strategic work.
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The Future of Pension Buyouts: A Captive Audience?
Gregson, Kevin J.; Benefits & Compensation International; v38 no2 pp 14-17, 20 Sep 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The dynamic activity United Kingdom's pension market in 2008 stems from regulatory, financial and economic influences. Many traditional firms continue to operate in the market, but new approaches are appearing to transfer pension obligations to stronger entities. Captive insurance companies are being rented to take over liabilities and other benefit risks. Liability driven investing provides the financial foundation for the captive insurers. The emerging position of pension merchant banker is an advisor who can bring together many varied services pension plans need in a strategically organized way.
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The Influence of Employee Compensation and Benefits on National Economies: Comparative Evaluation of Ireland and the United States.
Trumble, Robert R.; Favi, Pelagie; International HR Journal; v17 no4 pp 13-26 Fall 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A comparative study examined the effects of employers' total compensation costs on the national economies of Ireland and the United States. The results were inconclusive since other significant factors are in play, principally Ireland's strong business friendly environment and moderate taxes. But Ireland's more favorable policies toward health insurance and leave benefits, established nationally, relieve the employer of those responsibilities and may contribute to the country's strong gross domestic product. Employers in Ireland must contribute for employee social security and paid leave. U.S. workers must rely on employers, not the government, for costly health insurance and most other benefits.
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Rolling Through the Downturn.
Speizer, Irwin; Workforce Management; v87 no13 pp 31-32, 34-37 Aug 11, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The real estate market slump is hitting employers as more employees are unwilling to lose equity for a job relocation. Companies are offering generous relocation packages but requiring employees to stay on the job for a longer time. While most corporate relocation involves moving within the country, international relocation continues to be strong, according to moving companies. Surveys show 68 percent of 154 international firms polled plan to increase relocations, though allowances per move are shrinking. Companies are rotating employees through international assignments for training purposes and to meet specific global needs.
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Localization Proclamation.
Shelly, Jared; Human Resource Executive; v22 no11 pp 29-30, 32-34 Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : According to surveys conducted in 2008, many employers are changing their policies regarding international assignments. Workers on international assignments usually receive higher benefits to cover the costs of moving to a different country, and many of them experience multiple transfers between countries. Increasingly, employers are turning to localization as a solution to both corporate and employee needs. A localized employee accepts an assignment with the understanding that the position will be considered a domestic hire, regardless of the employee's country of origin. This arrangement saves money for the employer and provides stability to employees and their families.
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Out of Boundaries.
Adams, Nevin; Schneyer, Fred; PLANSPONSOR; v16 no6 pp 41-43 Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Despite the popularity of outsourcing many corporate functions, American companies have been slow to outsource human resources management. Rather than outsource the entire HR function as part of a bundled set of services, they prefer a more focused approach. Choosing which specific functions to outsource allows companies to see the effects on their bottom lines more quickly. They are willing to accept change in the way their HR functions are handled, rather than insisting that their own corporate procedures be followed. According to experts, increasing numbers of multinationals and other companies worldwide are turning to outsourcing.
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U.S. Institutions Rethink Traditional Asset Allocation Models.
Pension Benefits; v17 no8 pp 3-4 Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : More American institutional investors are adopting practices to follow modern portfolio theory, maximizing diversification, and pension plans are following suit. The goal is for weakly correlated allocations for risk management, more international investments and lower risk from interest rate fluctuation and performance volatility. Plans are increasing assets in international stocks and hedge funds, while lowering allocations to domestic fixed income. Greenwich Associates finds diversification to be a strong trend among endowments and foundations and increasingly in pension plans. They are moving away from domestic focus and toward a more global one while shifting toward alternative investments.
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Rev. Rul 2008-40.
Internal Revenue Bulletin; no2008-30 pp 166-170 Jul 28, 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : When funds are transferred from a 401(k) plan account to a nonqualified foreign trust, the transfer is considered a distribution from the originating plan. This is also true for transfer to a Puerto Rico Code Section 1165 plan. However, ERISA Section 1022(i)(1) states that if a pension, profit sharing or stock bonus plan is created or organized in Puerto Rico, all participants are Puerto Rico residents and ERISA Title II applies, then the plan is treated as a qualified plan. A transfer of assets from one qualified plan to another is not a distribution of benefits if the originating plan continues. Transition relief is available, depending on the date of asset transfer and other factors.
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Bangladesh: Compensation and Benefits.
Mittal, Radhika; Benefits & Compensation International; v38 no1 pp 8-10, 12 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Bangladesh has a history of talent migration, leading many multinationals to bring in talent from other countries. Compensation in many sectors of Bangladesh saw significant growth in 2005-2007, leveling off in the 2007-2008 salary year. Similar to India, the Bangladeshi compensation structure includes a base salary with various allowances and compensations added on, although the structure in Bangladesh is less flexible than in India. Personal tax rates are lower than in India or Sri Lanka, capping at 25 percent. One unusual aspect of employment in Bangladesh is the small number of companies which bear the entire personal tax liability for their employees.
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Career and Technical Education: Comparing China's Political, Rural and Economic Sectors.
Gaal, John S.; Benefits & Compensation Digest; v45 no7 pp 32-36 Jul 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Interviews with educators at Chinese vocational schools in Beijing, Guiyang and Shanghai in 2007 revealed differences of potential significance for apprenticeships and other training programs. China strongly supports training skilled workers and internships as part of secondary education for boys and girls and ethnic minorities. The country provides free or low cost teacher education and textbooks. Instructors must possess content knowledge as well as strong language, mathematics and teaching skills. Technical programs must be as rigorous as academic programs while providing significant practical experience.
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Egypt: Employee Benefit Market Trends.
Khalek, Rabih; Benefits & Compensation International; v38 no1 pp 12-13 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : While total direct insurance premiums in Egypt grew 21 percent from 2006 to 2007, they still only represent less than one percent of the country's gross domestic product. Similarly, employee benefits show low market penetration and high growth. The Egyptian insurance market as of June 2008 consisted of 12 companies, half of which are local and half multinational. With 15 million workers on a low income base, the Egyptian market is conducive to worksite marketing. Group medical has particularly strong potential due to the high cost of medical services and limited government medical benefits.
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Health Insurance in China and India: Segmented Roles for Public and Private Financing.
Bhattacharjya, Ashoke S.; Sapra, Puneet K.; Health Affairs; v27 no4 pp 1,005-1,015 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Although health care programs for the poor will continue to be publicly funded in both India and China, funding gaps in those programs will need to be filled by private insurance programs. Issues of pricing, plan design, quality standards and transparency need to be addressed. Coverage of elderly who enrolled in the plans when they were younger and healthier will need to continue. Rates for that coverage will need to be risk-adjusted but still affordable and arbitrary exclusions and limitations avoided. These are difficult challenges, but with nearly 80 percent of total health care spending in India and 60 percent in China out of pocket, they are challenges that must be tackled.
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Indonesia: The Pension Environment.
Theng, Nicky; Anggraeni, Dewita; Benefits & Compensation International; v38 no1 pp 14-18 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Despite compulsory pension benefits, Indonesian pension participation rates are low, largely due to the complicated regulatory system currently in place. The Indonesian pension market is dominated by four programs: government programs for civil servants and military and police officers, a mandatory state-owned social security program providing health and life insurance and old age benefits, and the DPPK. A DPPK is a tax-sheltered pension program, either defined benefit or defined contribution, established by an employer as a separate legal entity. Although less than ten percent of Indonesian workers participated in a private sector pension plan in 2006, the Ministry of Finance outlined a plan to develop private pensions in Indonesia by, among other things, making them more efficient and coordinating them with overlapping programs. The government has also introduced funding requirements on previously pay-as-you-go pensions.
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Iran: Compensation and Labor Law Trends.
Gandhi, Vijay; Rogers, Jo; Borazjani, Saba; Benefits & Compensation International; v38 no1 pp 19-20 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : By rule of the Supreme Labor Council, employers in Iran must pay workers a minimum wage of about US$120 monthly. Employees work a 44 hour week with about 22 national holidays and a month vacation each year. Compared with other Gulf countries, employers in Iran pay nearly 59 percent less. The country mandates annual pay raises, which are projected to go up 15 percent to 23 percent of basic salary in 2007, against projected inflation of 18 percent. Businesses pay 25 percent tax on profits, up from ten percent. Individuals pay ten percent tax on income from about US$3,000 to $5,000, with tax rates rising by five percent increments up to 35 percent. Foreign nationals must have a proper work permit, access to which is tightly controlled.
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Mexico: Population Aging and Retirement.
Flores, Enrique Marin; Benefits & Compensation International; v38 no1 pp 21-24 Jul-Aug 2008; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Mexico's employment status is critically affected by declining fertility and dropping mortality, resulting in an older population on the whole. In 2005, five percent of the population was age 65 or older, and the figure is projected to be 21 percent by 2050. To meet the retirement funding dilemma, the country must generate new jobs so workers have a chance to build income before they get too old. Older individuals will be much less able to rely on family support, and changes in social security make that an inadequate income source. Much of the pressure will fall to employers providing pension plans and educating plan members about earning and saving for retirement.
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