Benefit Plans Are Increasingly Managed from Corporate Headquarters

December 3, 2004
Amid mounting concern over large liabilities, rising costs and more government and investor scrutiny, big corporations are centralizing their control over benefit plans in which employees around the world participate.

Towers Perrin studied 134 global companies based mainly in the United States and Europe, such as ADP, Amgen, BP, Bristol-Myers Squibb, Dell, Merck, McDonald’s and Reuters. It found that 51 percent of companies are exerting an increased amount of influence over their benefit plans from their corporate headquarters, a trend that will accelerate in the coming years. And more than two-thirds of companies have set up centralized committees or management teams to oversee global pension plans or other global employee benefit plans.

"As recently as the mid-1990s, many multinational companies took a fairly hands-off approach to managing employee benefits in the various countries where they operate, leaving key decisions primarily to local managers," according to the Towers Perrin report. "However, the past decade has brought an evolutionary shift in worldwide benefits management."

Even though human resources departments play the lead role in setting global benefit objectives in most companies, finance departments are playing a growing part. Of the companies where there has been a change, 45 percent of respondents say that finance has gained the most influence over the last two years. Only 30 percent say human resources has gained the most influence.

The study also asked multinational corporations for their most important issues, which are:

Controlling current benefit costs: 98 percent

Understanding the size and nature of the company’s global pension liabilities: 91

Ensuring global consistency of financial and accounting disclosures: 91

Predicting emerging benefit costs: 87

Attracting and retaining key talent: 86

Managing health care and social-welfare issues: 85

Applying new global pension accounting standards: 80

Increasing international mobility of key talent: 77

Managing pension and employee benefit programs in mergers and acquisitions: 76

Improving efficiency of benefit delivery: 74

Developing a global pension and employee benefit strategy: 68

Ensuring consistency of global pension and employee benefits: 61

Developing a global investment policy: 58

The aging of the population: 57

Skills shortages: 43

Increasing numbers of part-timers: 11