Multinational firms offer a 401k to help employees retire successfully, and they view them as essential when trying to retain and attract top talent. They also plan to increase auto-enrollment and auto-escalation features over the next few years.
Those are a few of the findings of “Global DC Survey for Multinational Corporations” released by fixed income mega-manger PIMCO on Monday.
Of the 26 firms surveyed, more than 60 percent ranked helping employees meet their 401k retirement investment needs as the primary objective in offering defined contribution plans.
Moreover, about half of the companies—which represent $230 billion of defined contribution assets worldwide—said they are likely to adopt the aforementioned 401k automatic enrollment and contribution-rate increases over the next few years.
Meanwhile about a third is likely to roll out institutional 401k investment strategies more globally such as white label-multimanager core and custom target-date lifestyle strategies.
“Multinational corporations are seeking help as they roll out and evolve their DC plans around the globe,” said Stacy Schaus, DC Practice Leader. “We created this survey to offer insight into global DC decision-making, governance and investments.”
The Newport Beach, California-based PIMCO’s survey found companies are attempting to surmount the challenges in a number of ways.
- Over half of those surveyed make DC plan decisions locally with global or regional oversight or parameters; these include decisions about investment and plan design, and selection of investment and administration providers. Fewer than one in five reported that decision-making is centralized to global leadership.
- About two-thirds of the companies said they are at least somewhat likely to move toward global relationships in investment management, insurance and consulting.
- Organizations said improved governance, lower costs and idea generation are the most valuable benefits of globalized retirement efforts.
- To improve global oversight, more than four in ten organizations said they have gathered local plan details, written a global retirement plan philosophy, and established a global leadership team.
In terms of investment strategies preferred, the survey also found that a majority believes active management is important or very important for non-U.S. bonds, emerging market equities, non-U.S. equities (developed markets), U.S. bonds, target-date strategies, U.S. small cap equities and balanced strategies.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
