NewsA Message from Jill Neilson, Managing Director, Global Consulting and Strategy.

Global Expansion in the High-Tech SectorIn our Global Consulting and Strategy Practice, we’ve witnessed significant international growth among emerging high-tech clients, and these companies have specific needs.

Not too long ago, a technology start-up typically focused on establishing a strong footing in its home country before expanding globally, but change is constant — as market pressures evolved, start-ups have had to adjust.

Now, companies must take advantage of as many potential growth opportunities, including global expansion, as possible to stay afloat. In fact, an April 2015 McKinsey & Company article found that “… fast growth is the best indicator that a company can beat the odds: organizations that are ‘super growers,’ with revenue rising at a compound annual rate of more than 50 percent, are eight times more likely to reach $1 billion in sales than those growing at less than 20 percent annually.”

Companies must expand beyond their home borders to take advantage of opportunities that allow them to not only survive but strive to be a “super grower.” In addition, immediate global growth allows emerging high-tech companies to support large clients — the sooner global expansion can occur, the sooner growth goals will be met. In an interview with McKinsey & Company, Anaplan’s Frederic Laluyaux said that “the problem of planning and executing your strategy is global. There is no point in waiting.”

Lastly, because many of these emerging companies provide service to global companies, they must also have a global footprint to provide “follow the sun” service. This strategy could result selecting locations through a cost/benefit evaluation in terms of functional needs and local talent.

What does this mean in terms of providing benefits?

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Global Consulting and Strategy (GCS) Staff UpdatesWe are pleased to announce that Erik Willecke joins our GCS team in the position of Consultant, Global Retirement. Erik has more than 10 years of actuarial experience. His background includes exposure to both Health & Welfare and Pension benefits. In addition, he is an ASA and holds a Bachelor’s degree in Mathematics from Stockton University. Erik is located in our New York office.

Global View® Quarterly Autumn 2015

In this issue:News 1Regulatory Updates 2

Argentina 2Australia 2Belgium 2Bosnia and Herzegovina 3Bulgaria 3Canada 3China 3France 3Hong Kong 3Hungary 4Ireland 4Israel 4Japan 4Kyrgyzstan 4Moldova 4Montenegro 4Namibia 4Netherlands 5New Zealand 5Peru 5Poland 5Portugal 5Puerto Rico 5Republic of Korea 5Russia 6Serbia 6Taiwan 6Turkey 6United Kingdom 6

Global Expansion in the High-Tech Sector 7Benchmark Month End Discount Rates 8

Global View — Autumn 2015 • 2

Global NetworkMeet our newest members in Mongolia and Netherlands.

AME LLC (Aviation + Mining + Energy) is the first licensed professional insurance brokerage firm in Mongolia. Established in 2006, AME has built a professional institution powered with a skilled team, global and local networks for delivering highly specialized services, and tailored solutions to its clients. AME provides reinsurance brokerage services and risk management consultancy.

Meeus Assurantien B.V. was established in 1927 beginning with car and fire insurance and expanding to include mortgages and brokerage. Meeus is one of the largest brokers in the Netherlands servicing both private and commercial clients, including P&C and Business Insurance. The Meeus office network covers the Netherlands and the Flemish part of Belgium. They differentiate themselves from competitors by providing personal attention to clients; access to specialists with know-how in international business; and independent advice. All international clients are treated as Key Accounts regardless of volume or size. Meeus is part of the Unirobe Meeus B.V., a wholly-owned subsidiary of AEGON.

Recent Announcements from Our Network Members

Country Member Updates

Sweden

Quality Broker Sverige AB — Sweden announces acquisition/name change to Soderberg & Partners

Switzerland

Swisscanto Vorsage AG announces consulting group to split and become Prevanto AG

Belgium ESOFAC BELGIUM becomes NEXYAN

Recent Country Regulatory UpdatesFor more detailed information, contact hrconsulting@xerox.com.

Argentina Social Security - Old Age PensionResolution 44 of 10 February 2015 amended certain social security benefit levels in accordance with the mobility index. From 1 March 2015 the guaranteed minimum monthly pension was increased to ARS 3,821.73 under Article 5. The maximum monthly pension was increased to ARS 27,998.69 under Article 6. The basic universal pension (prestacion basica universal - PBU) was fixed at ARS 1,805.53 under Article 8. The minimum and maximum tax bases were set at ARS 1,329.31 and ARS 43,202.17 respectively under Article 7.

Partial Permanent DisabilityThe partial permanent disability benefit for incapacity of 50% or less is now subject to a minimum of ARS 713,476 multiplied by the degree of incapacity. For incapacity over 50% and less than 66% the value of the employee’s partial permanent disability pension has been increased to a minimum total amount of ARS 713,476 (Article 2). A lump sum is also payable equal to ARS 317,101 (Article 1).

Total Permanent DisabilityThe total permanent disability benefit has an increased lump sum payment of ARS 135,117 (Article 4). The lump sum for the monthly pension benefit has been increased to a minimum of ARS 713,476 (Article 3). Where the employee is assessed with severe disability and requires constant care, the lump sum for the additional monthly pension benefit has been increased to a minimum of ARS 396,376 (Article 1) (there is no change to the monthly allowance of ARS 2,000).

DeathOn the death of an employee, the following benefits may be payable:• A lump sum equal to ARS 135,117

(Article 4).• The lump sum for the monthly pension

benefit has been increased to a minimum of ARS 475,651 (Article 1).

AustraliaProjected Legislation - Social SecurityOn 25 February 2015 the government released a final report on a review of the welfare system called A New System for Better Employment and Social Outcomes (the McClure Review). The objectives of the review were to identify ways to make the welfare system simpler, fairer and more effective as well as encouraging work. A key recommendation is reform of the income payment architecture that is employment focused and built around five primary payments: a tiered working age payment, supported living pension, a child and youth payment, a carer payment and the age pension. Government action on the report’s recommendations is expected to follow with the 2015-16 budget.

Regulation - PensionsThe Australian Prudential Regulation Authority (APRA) released 26 updated final superannuation reporting standards in April 2015 all effective from 1 July 2015. A further five standards were released for consultation.

BelgiumLegislation - PensionsFrom 1 January 2015, differences in the treatment of blue collar and white collar employees in occupational pension plans must not be implemented or increased, and any existing differences must be phased out by 1 January 2025. By 1 January 2023 funds which operate sectoral (industry-wide) pension plans must have collective agreements in place for compliance with the law. The market view is that non-sectoral private sector occupational pension plans will wait to see what is decided by these collective agreements, and therefore will not make any immediate changes to existing provisions.

Projected Legislation - Retirement AgeThe Belgian government announced its intention to gradually increase the age for the state pension from 65 to 67 years by 2030, with the minimum age for early retirement similarly being increased to 63 years by 2018 with a minimum of 42 years of service.

Global View — Autumn 2015 • 3

Social Security - Benefits• From 1 January 2016, the age of

qualification for a survivor’s pension for a widow(er) will increase from 45 years to 45 years and six months (this increases thereafter by six months per year to reach 50 years in 2025).

• From 1 January 2015, a transition allowance is payable to a qualifying widow(er). To qualify, the widow(er) must be under age 45 (the qualifying age increases by six months per year from 2016 to reach age 50 in 2025) and also have been married to the deceased for at least one year in case of non-accidental death or non-occupational disease; those married for less than one year with a child of the deceased or a dependent child may also qualify.

Bosnia and HerzegovinaLegislation - EU Membership The Stabilisation and Association Agreement (SAA) between the EU and Bosnia and Herzegovina, which was signed in 2008, came into force on 1 June 2015. This has given extra impetus to attempts to bring the country’s insurance laws into closer harmony with EU insurance directives.

Projected Legislation - Compulsory InsuranceA draft Law on Compulsory Insurance in Transport was submitted to the Republika Srpska (RS) parliament on 4 March 2015 and was still under consideration in May 2015. The law includes changes to all four compulsory transport classes: motor third party liability, personal accident insurance for passengers on public transport, aviation, and liability in respect of mechanically powered watercraft (for details refer to the April 2015 Non-Life Regulatory Alerts under Projected Legislation - Motor Third Party Liability, Projected Legislation - Personal Accident, Projected Legislation - Aviation and Projected Legislation - Marine Liability respectively).

Regulation - Consumer Dispute ResolutionThe Insurance Supervisory Agency of the Federation of Bosnia and Herzegovina (ISAFBiH) issued the Regulations on the Insurance Ombudsman on 9 April 2015 to create the new position of insurance ombudsman in the Federation.

The ombudsman, who is based in the insurance supervisor’s office, may issue an opinion regarding an insurance dispute but does not have the power to make binding awards against insurance companies.

BulgariaProjected Legislation - PensionsIn December 2014 the Bulgarian government approved a law which might force employees to decide whether to continue to contribute to private pension funds or to transfer their mandatory pillar II contributions to the National Social Security Institute (NSSI) or pillar I. In late January 2015, however, the government decided that if employees choose to stop contributing to private pension funds, their contributions would be transferred into the “Silver Fund” (established in 2006 to cover future deficits in the state pension system) instead of the NSSI. Employees with more than five years to retirement would be given the option of changing their preference once a year. The proposals were still under discussion in early March 2015.

Canada Projected Legislation - Pensions, OntarioOntario introduced Bill 57, The Pooled Registered Pension Plans Act 2015 on 8 December 2014 to establish the Ontario retirement pension plan (ORPP).

China Legislation - PensionsThere are around 40 million public employees who make no pension contributions and whose pensions (of up to 90% of final salary) are paid by the government directly from taxation revenues. This generous and unfunded level of pensions is fiscally unsustainable. The government has therefore decided that with effect from October 2014 public employees would contribute 8% of salary and their employers 20% of salary to a pension pool that will be used to fund a less generous level of provision for future retirees.

Egypt HealthcareA new initiative to reinvigorate health reform was launched with the publication of a World Bank report in February 2015 laying out a new roadmap to deliver social justice in healthcare provision.

Its recommendations include raising the quality of care, expanding social health insurance for the poor and scaling up health services in lagging areas linked to the burden of disease.

France Projected Legislation - PensionsIn early 2015 it was suggested that union pressure was being brought to bear against third tier pension arrangements for highly paid senior executives whose salaries are in excess of the limits for the compulsory plans. Taxation measures are already in effect that penalise employers that provide a benefit in excess of eight times the social security limit by requiring the employer to pay a tax of 45% on the whole benefit. The government has proposed linking the employee’s pension entitlement to their performance in the company, and the bill to implement this change was being debated in parliament in May 2015.

Hong Kong Legislation - PensionsThe Mandatory Provident Fund Schemes (Amendment) Ordinance 2015 was passed on 21 January 2015. The main effects of the legislation are summarised below.• Members are allowed to leave their funds

on deposit in the mandatory provident fund (MPF) system after retirement and to withdraw them as required (“phased withdrawal”). Members are allowed to make up to four withdrawals a year free of tax and free of charge. This change will be implemented early in 2016.

• Members are allowed to withdraw their MPF funds before normal retirement date in the event of terminal illness (defined as an illness that is likely to reduce life expectancy to 12 months or less). This change will be implemented in the third quarter of 2015.

• MPF trustees and trustees of schemes regulated by the Occupational Retirement Schemes Ordinance are allowed to disclose members’ personal information to the US Treasury in accordance with Hong Kong’s intergovernmental agreement on the US Foreign Account Tax Compliance Act 2010 (FATCA).

Global View — Autumn 2015 • 4

Projected Legislation - PensionsThe Mandatory Provident Fund Schemes Authority (MPFA) published the conclusions of its public consultation on the design of default funds in March 2015. The most important conceptual change is that the idea of a default fund for members who cannot make more specific investment choices has been replaced by the idea of a default investment strategy. The government will introduce legislation in the course of 2015 with a view to default investment strategies being introduced by the end of 2016.

Projected Legislation - Voluntary Health InsuranceThe December 2014 consultation conducted by the Food & Health Bureau on the Voluntary Health Insurance Scheme (VHIS) was extended until 16 April 2015. On 11 March 2015 the Hong Kong Federation of Insurers put forward a counter-proposal, dubbed VHIS2, which is intended to address some the deficiencies of VHIS1. The main differences between VHIS2 and VHIS1 are summarised below.Although each insurer must have at least one VHIS-compliant product, they should be allowed to continue offering alternative products to meet clients’ varying needs. As an alternative to guaranteed acceptance, insurers should be allowed to offer a lower premium option with a pre-existing condition exclusion. Re-underwriting should be allowed on change of insurer but any consequent premium loading should be borne by the High Risk Pool. There should be a voluntary deductible option for customers who want a lower premium. There should be a voluntary 20% co-payment option for customers who want a lower premium.

HungaryLegislation - PensionsThe 2015 budget, passed by parliament on 15 December 2014, included the provision that the assets of private mandatory pension funds will be transferred to the state pension funds (pillar I) if more than 30% of their members failed to pay membership fees over six months.

Ireland Projected Legislation - PensionsIncluded in a series of measures announced in February 2015 by the Minister of Social Protection to broaden pension coverage,

was government approval of development work to establish a new supplementary workplace retirement saving scheme. A further announcement confirmed development work to “reform and simplify the pensions landscape” to improve its efficiency and supervision.

Israel Projected Legislation - HealthcareAs reported in the November 2014 Regulatory Alerts under Projected Legislation - Healthcare, the Minister for Health, Yael German, led a review of the existing healthcare system and several changes were proposed. Following the dissolution of the Knesset in December 2014 and the resignation of the Minister of Health, it is unclear at present whether the proposals for the health system will be adopted.

Japan Projected Legislation - Taxation - PensionsIn April 2015 a bill was submitted to the Japanese Diet to increase retirement savings by improving tax incentives for defined contribution (DC) plans. The proposed legislation would increase the annual tax deductible limits for DC contributions as follows:• JPY 276,000 (USD 2,626) for non-working

spouses or employees not covered by an employer sponsored plan

• JPY 240,000 (USD 2,284) for employees covered only by an employer sponsored DC plan with the maximum tax deductible employer contribution amended to JPY 420,000 (USD 3,996)

• JPY 144,000 (USD 1,370) for employees who are members of externally-funded defined benefit (DB) plans

• JPY 144,000 (USD 1,370) for employees who are members of both DB and DC plans, with the maximum tax deductible employer contribution for the DC plan amended to JPY 186,000 (USD 1,770).

Employee contributions would be made to individual retirement accounts (IRAs) except for those DC plans in force at the date of change that already allowed employee contributions. In addition small employers would be allowed to contribute to their employees’ IRAs subject to the above limits

KyrgyzstanLegislation - Retirement AgeThe differential in pensionable ages for certain categories of citizens in Kyrgyzstan is gradually being eroded, with the pensionable age for residents of mountainous areas increasing by three years to 58 for men and 53 for women. For residents of remote areas it has been raised by one year to 61 for men and 56 for women.

MoldovaHealthcare - ContributionsUnder Law No 74 dated 12 April 2015 on Compulsory Health Insurance Funds for 2015, the contribution percentage rate has been increased to a total of 9% (split equally between employer and employee), an increase from 8% in 2014. The annual fixed amount contribution of MDL 4,056 (USD 328) is unchanged.

MontenegroLegislation - PensionsIn view of the danger of price deflation, the Pension and Disability Insurance Law was changed from 1 January 2015 to prevent negative indexation of pensions in payment.

NamibiaProjected Legislation - SupervisionLegislation dealing with regulation, licensing and registration of intermediaries (previously included under the Financial Advisory and Intermediary Services Bill) is now expected to be included in the Financial Institutions and Markets Bill (FIM bill). The requirements potentially include minimum solvency requirements, codes of conduct, minimum qualifications and an ombudsman for intermediaries. The FIM bill, which was expected to come into effect in 2014, is now not expected before 2017.

It is thought that the Namibia Financial Supervisory Authority Bill (NAMFISA bill) will come into effect at the same time.

Projected Regulation - Insurance The Namibia Financial Institutions Supervisory Authority (NAMFISA) was in consultation with the insurance market in March 2015 regarding the introduction of new standards and regulations in advance of the Financial Institutions and Markets Bill (FIM bill).

Global View — Autumn 2015 • 5

Netherlands Projected Legislation - PensionsA bill before parliament on pensions communications aims to introduce statements of accrued pension rights under pillar I and pillar II, to be provided through a national pension register. Consideration is also being given to including pillar III entitlements in the statements. Implementation is expected by 2017.

The bill expanding the right of consent of works councils with regard to pension schemes is expected to enter into force on 1 July 2015. For details refer to the July 2014 Life & Benefits Regulatory Alerts under.

New Zealand Legislation - Pensions - ContributionsThe NZD 1,000 government “kick-start” contribution to new KiwiSaver (KS) plans was abolished with effect from 21 May.

Peru Legislation - Social Security and PensionsLaw No 30237 of 17 September 2014 repealed Law No 30082 of 22 September 2013, which introduced obligatory contributions to the public and private pension schemes for the self-employed and reinstated voluntary contributions. The self-employed may choose to have their obligatory contributions refunded or in the pensions schemes.

Social Security - Benefits - DisabilityA new non-contributory benefit for individuals with severe disabilities, who are classed as poor and not in receipt of other benefits, is under trial in a small number of regions. The monthly benefit will amount to PEN 125 and will have no minimum age requirement. The Minister of Finance has guaranteed funding for the scheme from the state budget for 2015.

Poland Social Security - Benefits - Family AllowanceOn 15 May 2015 a proposed bill relating to social security was approved, under which the family allowance would be reduced “penny for penny” above the threshold, gradually reducing to zero (under current legislation family allowances are lost entirely if the earnings exceed the threshold).

Social Security - Old Age PensionThe Law of 5 March 2015 amended the law relating to the old age pension provided by the social insurance fund. From 1 May 2015 the mortality table to be used for the calculation of the old age pension would be the one in force at the date of retirement or statutory retirement age, whichever is more beneficial to the pensioner. The law also amends provisions relating to periods such as higher education and prescribed childcare leave, which are taken into account for the calculation.

Portugal Legislation - Early Retirement Decree-Law No 8/2015 of 14 January revokes the suspension of the flexible early retirement provision under Decree-Law No 85-A/2012 of 5 April 2012.

A transitional regime for 2015 has been established, during which beneficiaries aged 60 years old or more, with at least 40 years’ contributions, are entitled to an early retirement pension.

After this transitional period, the scheme which was in force at the date of the suspension will be resumed. This Decree-Law entered into force on 1 January 2015.

Puerto Rico Taxation - PensionsThe Puerto Rico Treasury Department (Departamento de Hacienda de Puerto Rico) published various tax-free limits for 2015 in its Circular Letter 14-05 of 15 December 2014, as shown below.• The annual maximum employee

contribution to cash or deferred arrangement (CODA) plans was unchanged at USD 15,000. From age 50 a “catch-up” provision permits an additional USD 1,500 to be invested, which was also unchanged. The corresponding figures for employees of the federal government increased from USD 17,500 to USD 18,000 and from USD 5,500 to USD 6,000 respectively.

• The limit on voluntary contributions of 10% of employee aggregate compensation in all the years of employment was unchanged.

• The annual maximum contribution on defined contribution (DC) plans increased from USD 52,000 to USD 53,000.

• The maximum annual employee compensation that may be taken into account when calculating contributions rose from USD 260,000 to USD 265,000.

• The maximum annual benefit under a defined benefit (DB) plan is unchanged at USD 210,000.

Republic of Korea Projected Legislation - Pension FundsMarket sources suggest that discussions are at an advanced stage for the introduction of UK-style trust-type pension funds. Currently the trustee status of pension funds is 100% contractual with the “trustee” being the pension provider (bank, insurer etc). Opponents of the measure suggest that this could increase costs for pension funds by up to 6% of fund values, to the detriment of the employers who would be required to fund the additional amount for defined benefit plans, and the employees who would have reduced retirement values for defined contribution plans.

Projected Legislation - PensionsThe Korean government has announced that companies with 300 or more employees will be required to provide company pension plans with effect from 2016, and the requirement will be gradually extended to all employers by 2022. From 2016, plans would also cover temporary employees with less than one year of service who are not covered for severance benefits.

The legislation is expected to require the funded ratio of defined benefit (DB) plans to be increased to 100% (compared with the current requirement of 70%) by 2020, with increases to 80% in 2016 and 90% in 2018 as interim measures. It is expected that tax changes will also be enacted that discourage lump sum payments rather than pensions.

Projected Legislation - Social Security and PensionsIn response to criticism regarding the protection of regular workers the government convened the Special Labor Market Restructuring Committee of the Korean Tripartite Committee for purposes of discussing and agreeing on ways to refine the labour market. The committee has spent some time discussing the Ministry of Employment and Labor’s (MOEL’s) “comprehensive measures for

Global View — Autumn 2015 • 6

addressing non-regular employees” whose main purpose was to prevent discrimination against non-regular employees, particularly in the area of job security. The outcome of these efforts is likely to have effects on the social security system and the employee benefits market.

Russia Legislation - Health Insurance - ExpatriatesFrom 1 January 2015, in order to obtaining permission to work in the Russian Federation, amongst other things the applicant must have a medical expenses insurance policy or an agreement with a medical organisation on the provision of paid medical services.

Legislation - Social Security and PensionsFrom 1 January 2015 a new state pension law came into effect. The law gradually raises the required number of contributions to accrue an earnings-related pension and changes the pension benefit formula to encourage workers to remain in work for longer. The normal retirement age remains 60 years for men and 55 years for women.

The new system consists of a compulsory earnings-related pension and a pension based on retirement savings. Those joining the labour market from 2015 onwards are eligible for the earnings-related pension based totally on the new regulations, while transitional rules apply to other workers. The regulations gradually raise the minimum number of years of contribution required for an earnings-related pension from five to 15 by 2024. From 2025 men aged 65 and women aged 60 with less than 15 years of contributions may receive a non-contributory pension.

As regards the retirement savings option, joining is voluntary and only those born since 1967 may participate. Those who join have 6% of earnings directed to an individual pension savings account and 10% to pillar I. The pension savings benefit is not indexed. The benefit is based on the account balance at retirement and the expected number of months the pension will be paid. This is currently 228 months (or 19 years) but from 2016, the number of months will be adjusted from time to time to reflect changes the average life expectancy of the retirees with pension savings accounts.

Those who stay in the work force after the normal retirement age will receive a higher pension when they retire.

SerbiaProjected Legislation - HealthcareIn March 2015 the Ministry of Health was working on a project that would allow patients to use their state health insurance rights to pay for private sector treatment, on the condition that the private healthcare provider matches the price of equivalent state sector treatment. If successful this would reduce waiting lists and improve the efficiency of state-funded health services but due to the low capacity of the private sector and the huge price differential between public and private providers, most observers are sceptical.

Projected Legislation - PensionsTechnical adjustments are planned to bring Serbia’s pensions legislation into conformity with the relevant EU directives. The deadline for this is the end of 2018.

Taiwan Legislation - PensionsOn 4 February 2015 the Legislative Yuan passed an amendment to the Labor Standards Act (LSA) intended to strengthen benefit provision in respect of retirement indemnity payments. Under the amendment those employers who have employees who are not covered by plans under the Labor Pensions Act (LPA) will be required to ensure more stringent funding levels are maintained in respect of their liabilities under the LSA. From the end of 2015 the law will require the total deposits with the Bank of Taiwan (the option chosen by most employers) to at least equal the sum of accrued benefits for persons entitled to retire during the following 12 months. Employers will have until the end of March of the following year to make good any shortfall. The law will also give precedence to accrued retirement and severance benefits in case of employer bankruptcy and increased the employer contribution to a central bankruptcy protection fund to 0.0015% from 0.0010% of payroll.

Projected Legislation - HealthcareOn 15 May 2015 the Legislative Yuan passed the long awaited Long-term Care Services Act that creates a new long-term care (LTC) network and extend services available to seniors with physical or mental impairments.

Provisions for funding for the services (through contributions from employees, employers and government) will be included in the Long-Term Care Insurance Bill that is being drafted by the Ministry of Health and Welfare. It is hoped that the bill will be presented to the Executive Yuan and the Legislative Yuan shortly. It is expected that the bill will be passed by 2017 and that the insurance system will be in place by 2020.

TurkeyRegulation - AgentsOn 30 December 2014, the Amendment to the Insurance Agents Regulations was published with additional announcements and circulars. The amending regulations provide additional detail with respect to agencies established as joint stock or limited companies, including operational and capital requirements.

Social Security - ContributionsFrom 1 January 2015, the monthly social security contribution ceiling has increased from TRY 7,371 to TRY 7,809.90 and will increase again to TRY 8,277.90 from 1 July 2015.

United Kingdom Legislation - PensionsThe Pension Schemes Act 2015, enacted on 3 March 2015, introduces the defined ambition (DA) as a third category of shared risk corporate pension design in addition to the established defined benefit (DB) and defined contribution (DC) scheme designs. Further measures include the following items:• Increased flexibility on how and when

members can access retirement savings• Provision of a framework for “collective

benefit” provision under workplace and personal pension plans. Collective defined contribution plans (CDCs) effectively encourage large scale risk pooling in the manner of an industry scheme across multiple employers. Such schemes seek to lower costs and provide target benefits for individual members

• The introduction of a guidance guarantee where everyone with a defined contribution (DC) arrangement is offered free, impartial advice as to the range of options available to them at retirement. The government’s Pensions Wise website launched this service online in February 2015

Global View — Autumn 2015 • 7

• The introduction of further safeguards to protect members and pension schemes when a transfer out of a defined benefit (DB) scheme is made. In addition a ban (with very limited exceptions) is introduced on transfers from public sector DB pensions into DC alternatives.

Projected Legislation - PensionsBudget 2015 on 18 March 2015 announced the intention to include an amendment in a future Finance Bill to give pension annuities policyholders the chance to sell their annuities in exchange for a lump sum payment. The amendment is to be introduced from April 2016. The lifetime allowance for pension savings is also to be reduced to GBP 1mn from GBP 1.25mn from the same date.

Taxation - PensionsPension liberalisation measures announced in Budget 2014 were contained in the Taxation of Pensions Act 2014, enacted in December 2014. From 6 April 2015 defined contribution (DC) members may withdraw their entire pension fund from age 55. Of the total fund 25% may be withdrawn tax free (as previously) but the balance may be withdrawn also under new flexi-access drawdown (FADD) arrangements.

The taxation of funds on death is also revised under the act with the accumulated fund balance payable tax free where the member dies before age 75 and, if death occurs after the age of 75 years, from 6 April 2015, a special lump sum death benefits charge of 45% applies. The taxation of funds on death is scheduled for further revision with the accumulated fund balance payable subject to income tax in the hands of the recipient where death occurs after age 75 from the 2016-17 tax year.

The Finance Act 2015 enacted on 26 March 2015 also included similar pension liberalisation measures announced in Budget 2014 including access to defined contribution (DC) pension benefits from age 55 and greater choice in the nomination of beneficiaries for a pension fund. In the event of death of a member before age 75 the beneficiaries’ annuities will be paid tax free.

Global Expansion in the High-Tech Sector (continued from page 1)

Certainly, the provision of local benefits is critical to several areas, particularly compliance with local regulations and recruiting talent. Often, emerging companies are competing with large, established high-tech companies for the same highly sought-after employees with technical expertise, and that tends to draw the focus to a company’s total rewards package, including supplemental benefits and perquisites. Emerging high-tech companies want to know what is typical in each market, but also how company culture, often supported by benefits, can be “translated” into each local market.

We have worked with many emerging high-tech companies over the last few years, and we have seen some commonalities.

Global expansion is driven by many factors, often including customer acquisition and employees to support them, and this expansion frequently begins in the “tried and true” mature EU markets such as France, Germany and the UK. Asian markets are also in the forefront of expansion, primarily China, Hong Kong, India and Singapore. Additionally, we see expansion in emerging high-technology centers including Israel and Eastern Europe, where there are well-educated workforces and a focus on technology and development.

Of course, with global expansion comes a growing multi-national workforce and the complications of managing benefits in countries with diverse requirements and norms. In many cases, home office Human Resources teams have neither the time nor the expertise to set up benefits locally. Regardless of the country, these companies have similar objectives when they set up benefits — compliance, scalability, flexibility, competitiveness and economy.

We also see similar questions from Human Resources in these emerging high-tech start-ups, such as:• Should I provide stipends or individual

policies until we are big enough to have a group policy?

• What is competitive in the market? What are our competitors offering?

• How is growth handled in terms of benefits?

While each employer, regardless of size or location, has its own unique concerns regarding benefits that must be addressed, there are also many commonalities. Priorities will vary by organization and may even change day to day, however it will all revolve around the same basic principle: how to attract and retain talent.

Our Global Consulting and Strategy Practice supports the global growth of our emerging high-tech clients, allowing them to focus on the core of their business.

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Benchmark Month End Discount RatesThe Buck Consultants Corporate Bond Yield Curves, including benchmark discount rates, is produced monthly.

The Yield Curves and benchmark discount rates are developed from data on corporate bonds with a high-quality rating by either Moody’s or Standard & Poor’s. Yield Curves are developed for bonds denominated in several currencies. The Nelson-Siegel-Bliss (NSB) curve-fitting methodology is then used to construct a curve of spot rates as a function of duration.

These curves and indices help determine the appropriate discount rate used to value the defined benefit pension liabilities for accounting purposes under US GAAP and IFRS.

As pension liabilities are inversely proportional to the discount rate and recent discount rate movements have been more volatile than in the past, companies with defined benefit pension obligations should track the movement in benchmark rates to avoid year-end financial surprises as we saw at year-end 2014.

Rates have increased slightly since the end of 2014 for United States, UK, and Eurozone (with fluctuations in the interim) and rates for Japan remain relatively flat, however none have yet to return to higher pre-2014 levels.

Contact UsIf you have any questions or would like more information, contact our Global Consulting and Strategy team at hrconsulting@xerox.com.

www.xerox.com/hrconsulting

Benchmark Month End Discount Rates

United States United Kingdom Euro Zone Japan

4.50%

4.00%

3.50%

3.00%

2.50%

2.00%

1.50%

1.00%Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15