Post on 10-Apr-2018
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Copyright 2010 Mercer LLC. All rights reserved. This session is part of an exclusive program called Mercer + Oxford Academics: Global Online Training which offers global human resource professionalsthree complimentary sample training sessions plus 30 paid online training sessions, with optional certification and worldwide peer networking. More information: www.hr-training.mercer.com
Introduction to Global Benefits
& CompensationAround the world in 45 Minutes
Module 0 Session 1: Foundation Level
Giles Archibald, Manchester/LondonRobyn Cameron, New YorkSteve Gross, Philadelphia
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Overview of This Session
This is a Foundation Level trainingdesigned for a global professional:
With no international experience
Entering into a new role with multi-
country benefits and/orcompensation responsibilities
What you will learn today:
Skills for awareness and sensitivityaround the differences in benefitand compensation practices around
the world
Knowledgeof global forces and
current employer trends
Inspiration from the interestingvariety of different employer
practices around the world
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Overview of This Session
DIMENSION 1:
How rewardsdiffer by country
DIMENSION 3:Regional differences
DIMENSION 2:Global driving forces
Three dimensions of international complexity
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How rewards differ
by country
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Compensation
Reward types differ by country How base salary is defined months of pay (12 or 13th month)
Merit increases may be much bigger
Cash allowances = guaranteed cash vs. base salary
Variable pay really based on performance?
Remuneration mix varies by country
US more at risk compensation than Europe, etc.
Salary ranges increase in less defined markets
Employee protections contracts, Works Councils, etc.
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United Kingdom Cash compensation is a relatively high
percentage of total value to employee
India Car includes car value + drivers salary
Other Benefits examples include:
Childrens education cost
Club subscription
Car loan
Personal loan House/apartment rent
Housing loan
Hard/soft furnishing loan
Examples of Typical RemunerationExecutive employee
United Kingdom
63%
2%
6%
6%
7%
13%
3%
India
26%
31%14%
4%
9%
16%
Base Salary
Guaranteed Cash
Total cash and LTI
Mandatory employercontributions
Retirement and other savings
Health
Death and disability
Car
Other benefits
Source: Total Employment Costs Around the World, Mercer (2009).
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BenefitsReward types differ by country
Level of social security
Need for private benefits
Speed of shift to DC retirement
Desired level of employee financial protection
Legislation: ability to change benefits, employee consultation
Severance: sometimes payable upon retirement
Financing systems
Absenteeism, wellness programs
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How rewards are changing
because of global drivingforces
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Demographic Shifts
Economic Performance & Investment Returns
Emerging Middle Class (in developing countries)
Changing Patterns Infectious/Chronic Disease
Climate Change & Environmental Degradation
Urbanization (in developing countries)
Changing Societal Attitudes of Stakeholders
towards Social Welfare / Retirement and Health
Healthcare Innovation & Regulation
Financial Innovation & Regulation
Global Drivers Macro Forces
Global Drivers Stakeholders Forces
Global Driving Forces
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Example of One Global Driving ForceDemographics
We have fewer children We are living longer
Sources: Global aging resources, Stanford Center on Longevity (2009); World Population Prospects: The 2006 revision, United Nations, Department of Economic and Social Affairs (2007).
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Change in Share of Population Age 65 and Older
Global Driving Force: Demographics
Sources: Global aging resources, Stanford Center on Longevity (2009); World Population Prospects: The 2006 revision, United Nations, Department of Economic and Social Affairs (2007).
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Global Driving Force: Demographics
Fewer workers supporting more retirees live longer
Major projected increases in public spending
Future generations: Less public pension; healthcare rationing likely
Source: OECD (2005); figures assume unchanged policies as from the early or mid-2000s
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Global Driving ForcesDegrees of importance and uncertainty
Note. Global driving forces were identified and prioritized through extensive expert interviews and refined in workshops conducted 2007 - 2008.Source: World Economic Forum in collaboration with Mercer and the OECD 2009; this research publication can be downloaded from www.mercer.com/wef
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Employers ResponseRetirement: Shifting the risk and the cost to the employee
Traditional DB Fixed Employee
Benefits
Fixed EmployeeContributions
Generous Benefits
Shared Risk Variable Employee
Benefits and/or
Variable EmployeeContributions
Employee RiskEmployer Risk
??All DC
Variable EmployeeBenefits
Fixed EmployerContributions
No PlanReduced DB Fixed Employee
Benefits
Fixed EmployeeContributions
Less GenerousBenefits
Yesterdays
Design
YesterdaysDesign
Tomorrows Design
Option 1
Tomorrows Design
Option 1
Tomorrows Design
Option 2
Tomorrows Design
Option 2
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Employers ResponseHealth & benefits: Shifting the risk and the cost to the employee
Traditional
Benefit Plans
Employer provides fixed list ofbenefits for all employees
Employer bears future costincrease
FlexibleBenefit Programs
Employees choose, within limits,how funds (provided by theirEmployers for purchasing benefits)are allocated
Employees can contribute to future
benefits costs increases
Employee RiskEmployer Risk
??No Plan
Yesterdays
Design
YesterdaysDesign
TomorrowsDesign
TomorrowsDesign
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Employers ResponseCompensation: Shifting from how much to pay to paying for desired outcomes
Focus on
How Much to Pay
Benchmarking
Competitive Agenda
Employee RiskEmployer Risk
Focus onWhat to Pay For
More Performance Measurementand Performance Mgmt.
Pay for Performance
Increasing Role of Variable Pay
Employee Differentiation Increasing Top Line Growth
Yesterdays
Design
YesterdaysDesign
TomorrowsDesign
TomorrowsDesign
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The Forces for change aresimilar worldwide but the
regions are different 1. Asia
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Remuneration in AsiaProfessional Non-Sales Employee
Lower wage environment
War for talent
Winning the fight for hot skills without
bidding up the cost Remuneration Mix
0% 20% 40% 60% 80% 100%
China
Hong KongIndia
IndonesiaJapan
MalaysiaPhilippinesSingapore
South KoreaTaiwanThailand
Typical Practice Multinational and Leading Local Companies
Base Salary Guaranteed Allowances
Variable Bonus and Commission Long-term Incentives
BenefitsSources: Benefits and Compensation Plans Around the World, Mercer (2009); Global Compensation Planning Report, Mercer (October 2009).
Variance in Pay Growth (2009 Forecasts)
3.0%
5.0%
15.0%
12.5%
10.0%
Vietnam
Singapore
Japan
India
China
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Retirement in Asia
Provident funds with lump sums common
Traditionally lower retirement age
Lump sum death and disability common
Prevalence Among Multinational and Local
Leading Companies (Approximate %)
0 20 40 60 80 100
ChinaHK
IndiaIndonesia
JapanMalaysiaPakistan
PhilippineSingapore
S. KoreaTaiwan
ThailandVietnam
DB DC Hybrid
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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Medical in Asia
Provision of private medical coverage to staff is very common
Strong trend towards Flex programs
Prevalence Among Multinational and LocalLeading Companies (Approximate %)
0 20 40 60 80 100
ChinaHK
India
IndonesiaJapan
MalaysiaPakistan
PhilippineSingaporeS. Korea
Taiwan
ThailandVietnam
Management or Higher Earners Only
All Employees with Equal Benefit Level for All Employee Levels
All Employees but Benefit Level Varies by Employee Level
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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2. Eastern Europe
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Remuneration in Eastern EuropeProfessional Non-Sales Employee
Shortage of technically skilled locallabor and local management
Pressure on salary increase, oftenorganized by strong trade unions
Remuneration Mix
0% 20% 40% 60% 80% 100%
Czech Rep.
Greece
Hungary
Poland
Russia
Slovakia
SloveniaTurkey
Typical Practice Multinational and Leading Local Companies
Base Salary Guaranteed Allowances
Variable Bonus and Commission Long-term Incentives
Benefits
Variance in Pay Growth (2009 Forecasts)
5.0%
12.0%
10.0%
6.0%
5.0%
Turkey
Russia
Poland
Hungary
Czech Rep.
Sources: Benefits and Compensation Plans Around the World, Mercer (2009); Global Compensation Planning Report, Mercer (October 2009).
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Retirement in Eastern Europe
Retirement provision is minority practice in many countries
Common to provide lump sum death and disability
Prevalence Among Multinational and LocalLeading Companies (Approximate %)
0 20 40 60 80 100
Czech Republic
Greece
Hungary
Poland
Russia
Slovakia
Turkey
DB DC Hybrid
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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Medical in Eastern Europe
Private medical popular among staff
Czech Republic: Contract with private medical facilities annual fee paid by
employer directly to the private clinic.
Prevalence Among Multinational and LocalLeading Companies (Approximate %)
0 20 40 60 80 100
Czech Republic
Greece
Hungary
Poland
Russia
Slovakia
Turkey
Management or Higher Earners Only
All Employees with Equal Benefit Level for All Employee Levels
All Employees but Benefit Level Varies by Employee Level
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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3. Western Europe
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Remuneration in Western EuropeProfessional Non-Sales Employee
Flat to moderate salary increases
Labor challenges in the technology
sales and services sectors
Broader use of variable pay
Remuneration Mix
0% 20% 40% 60% 80% 100%
AustriaBelgium
DenmarkFinlandFrance
GermanyIreland
ItalyNetherlands
NorwayPortugal
SpainSwedenSwitzerland
UK
Typical Practice Multinational and Leading Local Companies
Base Salary Guaranteed Allowances
Variable Bonus and Commission Long-term Incentives
Benefits
Variance in Pay Growth (2009 Forecasts)
5.0%
2.5%
4.0%
3.5%3.3%
UK
Switzerland
Norway
Germany
France
Sources: Benefits and Compensation Plans Around the World, Mercer (2009); Global Compensation Planning Report, Mercer (October 2009).
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Retirement in Western Europe
Social security in decline
Rapid movement from DB to DC
Income protection for death/disability common
Prevalence Among Multinational and LocalLeading Companies (Approximate %)
0 20 40 60 80 100
AustriaBelgium
DenmarkFinlandFrance
GermanyIreland
ItalyLuxembourgNetherlands
Norway
PortugalSpain
SwedenSwitzerland
UK
DB DC Hybrid
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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Medical in Western Europe
Private medical plans not majority practice
Some countries provide private medical benefits only to their management
Prevalence Among Multinational and LocalLeading Companies (Approximate %)
0 20 40 60 80 100
AustriaBelgium
DenmarkFinland
FranceGermany
IrelandItaly
LuxembourgNetherlands
NorwayPortugal
SpainSweden
SwitzerlandUK
Management or Higher Earners Only
All Employees with Equal Benefit Level for All Employee Levels
All Employees but Benefit Level Varies by Employee Level
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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4. Latin America
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Remuneration in Latin AmericaProfessional Non-Sales Employee
Remuneration Mix
0% 20% 40% 60% 80% 100%
Argentina
Brazil
Chile
Colombia
Mexico
Puerto RicoVenezuela
Typical Practice Multinational and Leading Local Companies
Base Salary Guaranteed Allowances
Variable Bonus and Commission Long-term Incentives
Benefits
Variance in Pay Growth (2009 Forecasts)
21.5%8.6%
28.3%
5.0%
7.0%
Venezuela
Mexico
Colombia
Brazil
Argentina
Mandated additional salary payment iscommon. For example:
13th month salary payment, Christmas or vacation bonus, or
Mandated profit sharing
Sources: Benefits and Compensation Plans Around the World, Mercer (2009); Global Compensation Planning Report, Mercer (October 2009).
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Retirement in Latin America
Real projected benefits are decreasing due to high inflation
Supplementary plan prevalence expected to increase
Trend from DB to Hybrid or DC
Prevalence Among Multinational and LocalLeading Companies (Approximate %)
0 20 40 60 80 100
Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
DB DC Hybrid
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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Medical in Latin America
Private medical coverage for all staff is very common
Trend towards wellness programs
Prevalence Among Multinational and Local
Leading Companies (Approximate %)
0 20 40 60 80 100
Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
Management or Higher Earners Only
All Employees with Equal Benefit Level for All Employee Levels
All Employees but Benefit Level Varies by Employee Level
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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5. Canada and USA
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Remuneration in Canada and USAProfessional Non-Sales Employee
Flat to moderate salary increases
Executive compensation levels: increased
oversight by boards and, potentially, byshareholders say on pay
Remuneration Mix
0% 20% 40% 60% 80% 100%
Canada
USA
Typical Practice Multinational and Leading Local Companies
Base Salary Guaranteed Allowances
Variable Bonus and Commission Long-term IncentivesBenefits
Variance in Pay Growth (2009 Forecasts)
3.7%
3.5%
USA
Canada
Sources: Benefits and Compensation Plans Around the World, Mercer (2009); Global Compensation Planning Report, Mercer (October 2009).
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Retirement in Canada and USA
Canada & USA: Trend to DC continues
Canada: Improving retention features and reducing costs in DB plans
USA: Government regulation of pension plans and litigation opposing Hybridplans both threaten long-term viability of DB plans. Recent legislation has
eased but not removed the litigation threat.
Prevalence Among Multinational and Local
Leading Companies (Approximate %)
0 20 40 60 80 100
Canada
USA
DB DC Hybrid
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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Medical in Canada and USA
Private medical coverage for all staff is very common
Canada and USA: Some employers continue to provide retiree medical benefits
but are considering changes to ensure financial sustainability
USA: Employers are considering potential impact of USA health system reforms
Prevalence Among Multinational and Local
Leading Companies (Approximate %)
0 20 40 60 80 100
Canada
USA
Management or Higher Earners OnlyAll Employees with Equal Benefit Level for All Employee Levels
All Employees but Benefit Level Varies by Employee Level
Source: Benefits and Compensation Plans Around the World, Mercer (2009).
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Dimensions of International Complexity
One size does not fit all
DIMENSION 1:How rewards
differ by country
DIMENSION 3:Regional differences
DIMENSION 2:Global driving forces
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Hands
off
Approval
requiredfor majoritems
HQ initiate
changes
Approval
requiredfor allitems
L OCA L CEN T RA L
Managing International Complexity
The spectrum of approaches
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The Global/Local Tension
Benefits of Local
Flexibility
Benefits of Global
Consistency
Creates consistent
culture andemployer brand
Leverages internal
resources
Improvesfinancial
management
Supports uniquelocal workforcerequirements
Leverages valueof local practices
Recognizes localbusiness requirements
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Balancing the Global/Local Tension
Employer PerspectiveOur reward programsfoster the knowledge,competencies, and
behaviorsnecessary forbusiness success
Employee Perspective
My rewards are part of acompelling value
propositionthat Iunderstand and support
Cost PerspectiveOur rewards are
affordable, and do notcrowd out other profitable
investments
Global governanceconnects the two
Employer PerspectiveOur reward programsfoster the knowledge,competencies, and
behaviorsnecessary forbusiness success
Employee PerspectiveMy rewards are part of a
compelling valuepropositionthat I
understand and support
Cost PerspectiveOur rewards are
affordable, and do notcrowd out other profitable
investments
Guiding principles whichcreate the desired employer
brand and overall efficienciesare best set globally
Program designs which
create desired results arebest set locally
Recognizes localbusiness
requirements
Leverages valueof local practices
Supports uniquelocal workforce
requirements
Creates consistentculture and employer
brand
Improves financialmanagement
Leverages internalresources
Benefits ofLocal Flexibility
Benefits ofGlobal Consistency
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Balancing the Global/Local Tension
Global Consistency
Employer Perspective
Our reward programs foster the
knowledge, competencies, and
behaviorsnecessary for business
success
Employee Perspective
My rewards are part of a
compelling value proposition
that I understand and support
Cost Perspective
Our rewards are affordable, and
do not crowd out other profitable
investments
Employer Perspective
Our reward programs foster the
knowledge, competencies, and
behaviorsnecessary for business
success
Employee Perspective
My rewards are part of a
compelling value proposition
that I understand and support
Cost Perspective
Our rewards are affordable, and do
not crowd out other profitable
investmentsLocalFle
xibility
Global Governance
connects the two
Program Designs which createdesired results are best set locally
Guiding Principles which create thedesired employer brand and overallefficiencies are best set globally
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Key Risks Around The Globe
Defined benefit pension plans
Post retirement medical plans
Executives
Stock option plans
Constructive obligations
Termination benefits (e.g. Italy)
Guarantees (e.g. Switzerland)
Jubilee payments
Early retirement programs
Disability, Medical
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Process for Developing a Global Guiding PrinciplesInvolving the right levels of the organization at the right time
is crucial to success
Join
t
Respons
ibility
LocalSubsidi
ary
Responsibili
ty
G
lobal/HQ
Responsibility
Understand theBusiness Strategy
Review global, regional and local
strategies
Where are they consistent? Where are the differences? To what extent do countries
operate independently / need tocollaborate?
1
Develop an Ideal WorldGuiding Principles Template
Without consideration for local country implications:
Template development following standard process
Modify for differences and collaboration needs
identified in Step 1 Clearly articulate purpose of the rewards program and
its individual components
2
Review Template Against Local Environments
Understand localcontext (social
programs,tax/legal, culture,labor environment)
3
Identify desirablechanges inrewards strategy to
ensure purpose ofprograms is met ina local context
Only makechanges that willhave a measurableimpact. Look forglobal / regionalconsistency
Conduct gapanalysis againstcurrent internaland externalpractices
Implement Identify barriers to change (legal,
cultural, managerial etc), prioritizeand develop implementationtimeline
Identify cross country synergies:Financial, Communication,Administrative
4
On GoingGovernance
Put processes in place to
regularly measure thesuccess of rewards
strategy against its purpose Modify rewards strategy as
needed
5
C
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Communicating the total employee value propositionwith scarcer resources
Compensation
Base pay Guaranteed bonuses Short term incentives Long term incentives Financial allowances
Financial recognition programs Deferred compensation
Careers
Performance management
Learning and development Career opportunity and pathing Tuition reimbursement Mobility opportunities
Benefits
Retirement Savings and other wealth creation programs Medical / Dental / Vision / Prescription Drug, etc. Life insurance Disability (short- and long-term)
Accident coverage Perquisites
Work Lifestyle
Time off
Wellness programs Dependent care Workplace flexibility Commuter programs Experiential rewards Non-financial, recognition
Current economic conditions are compellingcompanies to manage employee remunerationmore strategically and globally
F th L i O t iti
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Further Learning Opportunities
30 Online Training SessionsOur 30 sessions are organized into 6 topic
modules (with 5 sessions per module):
1. Global Policy Setting & Governance
2. Global Growth & Performance Drivers
3. Global Mobility
4. Europe & Middle East
5. Asia Pacific
6. Americas
How is Mercer + Oxford differentfrom other training?
1. Gold standard content
2. Online training
3. Flexible modular program4. Certification
5. Worldwide peer networking
Additional sessions will be available in April 2010. We encourage you toregister to participate via this link on your screen: www.hr-training.mercer.com
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Resources
All Regions
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All RegionsDC plans are common, but DB plans may still represent significant liabilities
Source: Mercer (2009) Benefit Plans Around the World
0 20 40 60 80 100
Austria
Belgium
Denmark
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Norw ay
Portugal
Spain
Sweden
Switzerland
UK
Retirement Prevalence of
supplementary benefits
0 20 40 60 80 100
Australia
China
Hong Kong
India
Indonesia
Japan
Malaysia
New Zealand
Pakistan
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Prevalence among multinational and leading local companies, %
Defined benefit Defined contribution Hybrid
0 20 40 60 80 100
Czech Rep.
Greece
Hungary
Poland
Russia
Slovakia
South Africa
Turkey
UAE
Argentina
Brazil
Canada
Chile
Colombia
Mexico
USA
Venezuela
Western Europe
Americas
Eastern Europe, Middle East & Africa
Asia-Pacific
28.5 57 9.5USAUSA
All Regions
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All RegionsPrevalence of employer-sponsored medical benefits
0 20 40 60 80 100
Austria
Belgium
Denmark
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
UK
0 20 40 60 80 100
Czech Rep.
Greece
Hungary
Poland
Russia
Slovakia
South Africa
Turkey
UAE
Argentina
Brazil
Canada
Chile
Colombia
Mexico
USA
Venezuela
Source: Mercer (2009) Benefit Plans Around the World
100USAUSAMedical Prevalence of
supplementary benefits
0 20 40 60 80 100
Australia
China
Hong Kong
India
Indonesia
Japan
Malaysia
New Zealand
Pakistan
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Prevalence among multinational and leading local companies, %
Management or higher earners only eligible
All employees, equal benefit level for all
All em ployees, benefit level varies by employee level
Western Europe
Americas
Eastern Europe, Middle East & Africa
Asia-Pacific
Glossary of Key Terms
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Glossary of Key TermsRetirement, Medical, Sickness, Disability & Death Benefits
AD&D: Accidental death and dismemberment.
Benefits Audit or Inventory: A detailed catalogue of the benefit plans of a multinational employer in force on a
specified date. Audits can be of varying elaboration, sometimes including much relevant background material and a
complete breakdown of current costs.
DB: Defined benefit retirement plan.
DC: Defined contribution retirement plan.
Dependent Coverage: Describes whether the plan provides coverage for dependents. Dependent category typically
includes the spouse and dependent children, unless otherwise stated in documentation. Some countries in Asia
include elderly parents in the definition.
Executive-only Plans: Either a retirement plan exclusively for higher-earning employees or plan under which a higher
contribution or defined benefit is provided to this group through the same retirement plan as for other employees.
GP: General practitioner.
HQ: Headquarters of a multinational company.
Hybrid: Mixture of defined benefit and defined contribution features in a single plan. Examples include:
A defined contribution plan that provides a guaranteed minimum defined benefit payment upon retirement;
A defined contribution plan with benefit at retirement age equal to accumulated contributions plus interest or a
fixed formula benefit, whichever benefit is higher; or
Company provides DB plan for existing employees and DC plan for new hires (in effect, two separate plans).
Glossary of Key Terms
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Glossary of Key TermsRetirement, Medical, Sickness, Disability & Death Benefits
Inpatient: Services provided under direction of a physician for at least 24 hours to an individual who is admitted to a
hospital as a registered bed patient.
Longevity risk management: Pertains to measuring and understanding longevity risk, putting it in context alongside
other risks, and advising on and assisting with ways to mitigate or transfer it between parties.
LTD: Long-term disability.
Mandatory Practice: Benefits provided by social security or mandatory employer-sponsored plan.
Mandatory Termination Indemnity: Lump-sum payment that must be made by the company (or that has been
prefunded by the company, possibly through an outside agency other than social security) when an employee retires.
Medical Inflation: National average rate of increase in medical care costs, shown as percent change over the
previous year. Not all countries report this statistic. Typical source is a government agency.
MFR/MFS: Minimum funding requirement/minimum funding standard.
Multinational Pooling: A way for multinational companies to achieve global economies of scale in the purchase of
insured employee benefits (life insurance, disability, medical, accident and sometimes pension) around the world.
NRA M/F: Normal retirement age: male (age)/female (age).
Outpatient: Services provided to an individual who is admitted to a hospital or clinic for treatment that does not
require an overnight stay.
Pan European Pensions (PEP): Multinationals can now manage pension plans across EU borders, following a
number of recent European Court rulings and the passing of various directives (most notably the 2003 Pensions
Directive). Potential cost savings and more efficient governance structures are causing many multinationals to
consider implementing pan-European plans.
Glossary of Key Terms
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Glossary of Key TermsRetirement, Medical, Sickness, Disability & Death Benefits
Prevalence: Indicates how commonly the plan is provided by multinational and local leading companies. Prevalence
percentages are based on Mercers Total Remuneration Surveys and on senior Mercer consultants experience
working with these companies in the local market.
Professional non-sales employee: Employees in a technical function or typically in non-sales professional role.
Professionals are individual contributors without supervisory responsibility, but may provide coaching/mentoring to less
experienced staff. This level of employees typically holds a university degree or full-trade equivalent.
Rider: Indicates whether a benefit is financed as part of another policy. For instance, the dental benefit may be a rider
to the medical plan.
Self-funded/Self-insured : When a company finances the benefit internally (as opposed to using an external
insurance policy).
SSCC: Social security contribution ceiling.
STD: Short-term disability.
TPD: Total permanent disability.
Typical Market Practice: Describes typical (half or more than half of companies), non-industry-specific, general
market practice for supplementary benefits provision by employers that include multinational and local leading
companies. Does not describe any subgroup differences in practice that may exist.
Vesting: Acquisition by a plan member of an absolute right to an immediate or deferred benefit by fulfilling prescribed
conditions, especially service requirements.
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Glossary of Key TermsCompensation programs
Short-term Incentives: Incentives provided to employees for a performance period of one year or less.
Mandated Vacation Allowance: Legally required paid time off provided to employees in addition to annual salary.
Supplemental Discretionary Vacation Allowance (on top of legal requirement): Not legally required paid time offprovided to employees in addition to annual salary.
Additional Salary Payment: Payments provided to employees in addition to salary but independent of performance(not performance-based incentives). Examples include 13th- or 14th-month salaries, Christmas or holiday/vacationbonuses, and mandated profit sharing.
Transportation Allowance: Payments made for transit purposes, either in the form of public transportationreimbursement or car allowances for business use of personal autos.
Car Benefit: Company-provided cars offered to employees.
Meals Allowance: Meal benefit provided to employees (lunch vouchers, cafeteria meals, etc.).
Other Cash Allowances: Any other cash allowance provided (housing allowance, school allowance, etc.). Frequency of Payments: Intended to reflect the number of payments provided in an annual pay cycle (12 monthly
payments, 13 or 14 payments corresponding to a 13th- or 14th-month salary practice, 12 months salary paid inbiweekly installments, etc.).
Prevalence Categories: Indicate how commonly the compensation element is provided by multinational companies.Prevalence information is based on Mercers global compensation surveys and Mercer consultant experience workingwith these companies in the local market.
Not Prevalent: Small minority of companies
Mandated: Required by law
Occasional: Less than half of companies
Common: Approximately half of companies
Prevalent: More than half of companies
Related Resources
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Related Resources
The future of pensions and health care in a rapidly ageing world, WorldEconomic Forum and Mercer (2008).
Transforming pensions and health care in a rapidly ageing world,
World Economic Forum and Mercer (2009).
Worldwide Benefit and Employment Guidelines, Mercer (2009).
Pan European Employer Health Benefits Issues, Mercer (2008).
Middle East Employee Benefits Survey, Mercer (2007/2008).
Related Resources
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BBC Country Profiles.
International Social Security Association.
Health policies, OECD.
Pensions, OECD.
International Update, US Social Security Administration.
Data & Statistics, World Bank.
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Copyright 2010 Mercer LLC. All rights reserved. This session is part of an exclusive program called Mercer + Oxford Academics: Global Online Training which offers global human resource professionalsthree complimentary sample training sessions plus 30 paid online training sessions, with optional certification and worldwide peer networking. More information: www.hr-training.mercer.com