Plan sponsors for multinational corporations are encouraging the use of investment products that can be used globally.
That’s according to the results of PIMCO’s first Global Defined Contribution Survey for Multinational Corporations, aimed at helping to identify the priorities and challenges associated with managing employee pension obligations in multiple countries.
With the decline of defined benefit plans, employers are instead increasingly offering defined contribution plans (in the U.S., 401(k) plans), to the extent that DC plans make up nearly half of the world’s $36 trillion in total pension assets.
But when employers cross international boundaries, they have to be sure that the plans they use serve all their employees.
In addition, they can encounter “significant obstacles,” said PIMCO, in the design of a global DC plan.
Some of those obstacles can include local regulations that must be satisfied, as well as the need to provide broadly consistent benefits to employees who relocate.
The survey sought data, trends, and opinions from 27 multinational plan sponsors, which together include over 850,000 DC participants and more than $150 billion in DC assets.
According to the survey results, among the top priorities of plan sponsors providing DC plans is the need to attract and retain talented employees with plans that help them retire at a desired age with sufficient income.
Sponsors must also review global plan governance, including creation of a global retirement plan philosophy and the evaluation and possible streamlining of providers.
Other survey findings included the need to simplify investment lineups, while encouraging investment managers to offer investment products that can be used globally, and expanding access to international DC plans.
Nearly a third of respondent firms already offer an international DC plan, and nearly half said they may consider adding one in the future.
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