Employers will play a critical role in shaping public policy and addressing concerns about global aging, says a new report on retirement and health care financing.
Mercer, a consulting business of Marsh & McLennan Companies Inc., New York, joined with the World Economic Forum, Geneva, and the Organisation for Economic Cooperation and Development, Paris, to recommend strategies that governments and employers can use in these areas.
Among Mercer’s findings are the following:
–Constructive discussions between governments and employers may create successes for both sides. Both employers and governments can create programs promoting work for older people, providing financial education, improving processes for savings or improving annuities to make the exchange of lump-sum payouts more effective.
–Employers can collaborate with financial service firms and health care providers to provide such initiatives as multinational pooling for life insurance and multinational management of health care arrangements.
–In defined benefit plans, the parties should compare fund performance to liabilities. For many plan sponsors, fiduciaries should consider delegating decisions to qualified professionals not only to get the best returns but also to avoid unnecessary risks.
–In defined contribution plans, employees should have simpler and fewer decisions to make. Also, contributions should be affordable to encourage lower-paid employees to consider joining. When auto enrollment if offered, Mercer recommends setting contributions at higher levels, employing automatic increases and using default investment options that provide a reasonable chance of achieving the targeted investment return. If there is no automatic enrollment, employers can use regular and repeated communications to encourage enrollment and saving.
Other recommendations in the report cover health care strategies and workforce strategies that anticipate an aging workforce. It was based on findings in 19 workshops in 11 cities around the world and more than 50 interviews of CEOs, senior executives, government ministers, academics and representatives from international organizations.