Multinational corporations are faced with providing benefits for globally mobile employees that are appropriate across multiple countries—specifically, retirement and post-retirement medical benefits. Multinationals that offer competitive, attractive and effective benefits across borders must consider their total reward philosophy; corporate business strategy; current retirement plan offerings; legal, tax and regulatory issues; financial implications; and employee wants and needs in order to succeed.

Competitive benefits strategies

To effectively plan for the future of their employees and remain competitive in the global marketplace, multinationals need to identify all staffing strategies, including those for key employee groups possessing characteristics that will most affect business success.

For example, third-country nationals could be key to providing an answer to a significant business challenge. Third-country nationals tend to take assignments in difficult settings. Their experience allows them to be culturally sensitive, and their presence may allow a company to fulfill local country labor restrictions. However, they pose a complex benefits challenge for many multinationals, since they can be a citizen or resident of country number one, hired by a multinational headquartered in country number two, stationed in and assuming local or regional responsibilities in country number three, and having potential tax residence in country number four.

Other factors that will affect the implementation of retirement benefits include development of a global retirement philosophy and strategy, availability of host country retirement plans to global employees, the effect of split payroll on compensation issues, and the impact of host country coverage requirements on social systems.

Global workers typically are more seasoned and financially savvy employees, with preset benefit expectations. In addition, although they have tended to be younger and less concerned about retirement, now they are starting to retire and are doing so in countries where they may have never lived or worked, which adds to the complexity of benefits design.

It may be possible for multinational corporations to develop appropriate benefit offerings based on typical global practices. Typical practices might include a defined benefit element with a predetermined benefit accrual, required and/or voluntary employee contributions, unreduced normal retirement age (60 or earlier), post-retirement inflation protection, pre-retirement survivor and disability benefits, benefits in a benchmark currency, and potential for post-retirement medical funding. No matter what the practice, though, the challenge is to design a retirement program that is applicable globally and considers the impact of multiple tax regimes and currency risk as related to contributions, investments and benefit determination.

Post-Employment Medical Coverage

In Retirement Post-Employment Medical Coverage is of great concern to a mobile and global workforce. However, providing medical coverage during retirement can be challenging when an employee's status is not easy to define. For example, globally mobile employees may retire to jurisdictions where they have never lived or worked, or to their home country where the employer no longer offers coverage, or where there may be no easy access to post-retirement health coverage.

Addressing strategic issues such as contractual obligations, benefits caps, local practices, employer-employee cost sharing, and whether a portion of retirement benefits is earmarked for medical costs, can help resolve some medical coverage questions.

Depending on the situation, an employer may choose to continue expatriate medical coverage, purchase an individual policy, enroll the employee in the applicable national health system at shared or employer-only cost, or use a combination of vehicles. Some jurisdictions require receiving a social system retirement pension as a precondition of receiving medical coverage (the cost is a percentage of the pension). Others have rules for employee coverage, but none for spousal coverage, and some offer no services, so individuals are responsible for finding sources of coverage on their own.