Global Plan Governance Policies: Benefit Risk Management by the Multinational Company

The Global Plan Governance Policy

• Globally, subsidiaries (or joint ventures) of multinational companies maintain private retirement plans (DB and/or DC) subject to different local laws.
• Potentially adverse legal and financial (as well as employee, public and shareholder relations) risks relate to the operation of these plans.
• Global Plan Governance Policies set core principles with respect to local plan governance and operation (e.g., “a governance structure will be established for each local plan that will include the designation of a governing body responsible for overseeing the operation of the plan in accordance with local law”).
• The process of maintaining a Global Plan Governance Policy serves to identify plan-related risks and to allocate responsibilities for managing these risks.

Objectives of a Global Plan Governance Policy

A principal objective of a Global Plan Governance Policy is global adherence to core plan governance principles and processes to minimize plan-related risks.  Other objectives can be to:

• establish and maintain a centralized data base as to retirement plans maintained worldwide;
• specify plan data to be provided by local entities to the parent company;
• identify retirement plan risk considerations in each local country and establish processes for monitoring of such risks at the local and parent company levels;
• clearly delegate global retirement plan oversight and monitoring responsibilities within the multinational; and
• possibly centralize other plan-related functions (e.g., plan asset data reporting, asset commingling for investment purposes, common investment manager selection, investment/funding related to DB plan obligations).