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U.S. regulations driving centralization of worldwide benefits planning


Benefit managers are scrambling to get a better handle on their international benefit plans in light of the Sarbanes-Oxley Act's financial reporting rules in the United States.

To better comply, many companies now are seeking to centralize their benefits operations.

Because of acquisitions, "many of our clients have as many as 10 to 15 businesses in a common country" with different types of benefit plans, said Tom Dolan, Somerset, N.J.-based senior vp, global benefits for Aon Consulting Worldwide.

Yet many may have little knowledge of their international units' benefits packages. In addition, gathering this data often proves difficult because of factors that include M&A activity, language barriers and local officials' protection of their "turf," industry experts say.

Sarbanes-Oxley requires firms to report on their pension plans' impact on financials and accounting worldwide, which means "headquarters needs to understand the procedures related to every single benefit program around the world" and monitor them effectively, said Yungchai Kim, Secaucus, N.J.-based principal and head of global consulting for Buck Consultants Inc.

"We're seeing a major trend towards a...more coordinated or centralized thinking around global benefit planning that's being driven largely among U.S. multinationals by Sarbanes-Oxley," said Mr. Dolan.

Companies "don't want to be caught off guard not knowing what their current practices are. They're frightened by the fact that the liability surrounding benefit plans can be potentially hugeÖso there's a whole kind of governance paradigm" that's driving companies, he said. "More and more, we're being asked by multinational companies, 'How can we get our arms around what we're doing?' "

The task is not easy.

"Data collection is heavy lifting," said Robert Wesselkamper, Chicago-based international practice director for Watson Wyatt Worldwide. "It is not elegant, it is not attractive; it's hard work and it's a universal struggle that all companies share," he said.

The challenge is to convince local staff "why they should take their time to give you that information," said Jayne Lux, director of the Global Health Benefits Institute, an initiative of the Washington-based National Business Group on Health. "They're busy like all of us."

Ms. Lux said, "If you do it compellingly, I think (local staff) may come along, although I'm not so delusional to think it may happen in just one conversation."

Turf wars can be a factor as well, say observers.

Donald E. Wiening, vp at Mountain Lakes, N.J.-based consulting firm Globex International Group, said if the human resources manager has had "a lot of autonomy in the past, it's very difficult" to get that person to give up any authority.

In one successful strategy, Mr. Wiening said, a company obtained the information it needed by having local consultants interview the local staff.