How can you make sure your retirement strategy continues to meet employee needs during periods of legislative and market change?
Executing your retirement strategy in a changing world
JENNIFER VIRGILIO: Legislation relating to retirement programs is evolving constantly. The changes cover all areas of retirement provision including new mandatory requirements. For example, required auto-enrollment, which is becoming more prevalent in Europe, Ireland is coming soon. And which is also gaining traction in Asia.
New plan design options, for example, collective DC in Japan, the UK, and the Netherlands and phased retirement options in countries such as Canada, Germany, the UK, and the US. There's new investment requirements, for example, ESG and sustainability reporting.
New governance requirements, for example, IORP 2 in Europe. And temporary changes during periods of economic turbulence as we've seen with short-term funding relief for defined benefit plans during COVID. And so the list goes on. With so much change, as an employer, you face significant risks from non-compliance and also significant opportunities from using new options available for the benefit of the company and your employees.
Having a strong global or regional governance structure in place can ensure that these risks and opportunities are addressed systematically and on a timely basis. Such a governance structure would be based on well-defined company guiding principles and typically incorporates elements such as clear roles, responsibilities, and approval processes, short and medium-term roadmap of activities, and regular reporting and feedback, including benchmarking, financial data, and participant analytics to inform future actions.
We see savings of about 15 to 25 basis points from streamlining governance and optimizing plan designs to ensure compliant, competitive, cost-effective programs. Your retirement governance can be effective and sustainable, which benefits you as an employer as well as your most valuable asset, your employees.