Most employers offering retirement plans now do so through defined contribution(DC)or hybrid approaches, according to a report.
Mercer’s Introduction to Benefit Plans Around the World: A Guide for Multinational Employers reports that an aging population, market volatility, and increased governance and accounting requirements are hastening the move to DC and hybrid plans.
“While DC and hybrid approaches may have understandable appeal, their popularity may come at a cost,” says Giles Archibald, a consultant with the firm. “We anticipate some reassessment of their use as companies make more of an effort to truly understand the impact of these retirement plan designs on employee savings and retirement patterns.”
Traditional defined benefit(DB)plans remain the predominant type of supplemental retirement plan in a number of countries, notably Japan, the Philippines, South Korea, Mexico, Venezuela, Finland, the Netherlands and Israel.
Even among these countries, however, there is a strong trend toward covering newly hired employees through DC or hybrid arrangements.
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