Why is engagement elusive?

Find your motivational “spark.”

Engagement got you down? Not sure where to start? Hard time trying to find that elusive unicorn? Faced with a multi-generational employee base, recessionary forces, and ever-changing business climate, employers are in a battle to hire, retain and engage the best talent.

If you’re looking for ideas to “spark” greater engagement in your organization, come join my colleague Ruth Hunt, Principal, Communication and Consumerism Thought Leader and I on 6/13, from 1:00 p.m. – 2:00 p.m. ET.

Buck Consultants is hosting a “choose your own adventure” webinar. We have worked with many organizations to develop innovative methods to get employees in, keep them motivated, and limit flight risk (without increasing bail!). We would like to share those methods and tools with you. The webinar will be a participative experience, where your colleagues, competitors, and other market magnates will answer polling questions – helping everyone understand each others’ challenges in sparking greater employee engagement.

It’s not too late to register, just click the link.

Steve Coco, Principal, Northeast Practice Leader, Talent and HR Solutions

Pension plan innovation from Detroit? Get your motors running.

Pension plan reform, restructuring and employee retirement

Anticipating what’s on the horizon of the defined benefit landscape is a challenge for employers and employees alike.

But make no mistake – pension-restructuring issues aren’t going away, as companies try to balance obligations with debts.

As I discovered just the other day while with a client, even many plan sponsors who are the most focused on the latest developments in the pension arena are sometimes caught off guard by developments we bring to their attention.

The funded status of a standard U.S. corporate pension plan in April 2012 fell 3.5 percentage points to 76.3 percent, according to BNY Mellon Asset Management. The drop resulted from a 4.5 percent rise in liabilities, stemming from falling interest rates and a decline in the equity markets.

According to the Cleveland Plain Dealer, the Ohio Public Employees Retirement System estimated that delaying pension reform costs its fund nearly $1 million a day. That same daily impact is nearly $2 million for the Ohio Police and Fire fund. The State Employees Retirement System is losing $27 million in savings annually.

The multibillion-dollar question continues to be, “What can companies do to stop the bleeding, reduce their liabilities and still honor their obligations to employees and retirees?”

As I told my client, sometimes new movements start in unlikely places, and I believe the latest developments out of the Motor City will indeed be a growing trend.

As has been reported in the media, Ford is offering to make a one-time, voluntary lump-sum payment to nearly all of its 90,000 salaried retirees and salaried former employees by the end of 2013. The buyout impacts retired employees but isn’t part of a new initiative to trim its overall workforce.  
(General Motors announced a similar plan on June 1.)

If someone chooses to receive the buyout instead of receiving recurring payments, then Ford’s pension debt to that person is fulfilled and pension liabilities are accordingly decreased.

Increasingly, plan sponsors have offered lump-sum payments to former employees who are not yet eligible to receive pension disbursements, allowing companies to more efficiently administer the plans down the road.

Participants taking the buyout gain more flexibility in planning how they’ll spend their retirement savings and end up with increased options on where to invest their money. Some view this as a good thing, others take the opposing view.

Ford’s decision adds a new wrinkle to the equation because the company is offering the lump-sum payments to retired former employees already receiving annuities. Ford and other companies who implement this new strategy are simply acknowledging that the company’s bottom line, stability (even in the wake of a successful second chance after the bailout), and credit worthiness are dependent upon reducing pension obligations and, as always, eliminating red ink.

As with any new option, there are potential pros and cons. The impact on HR departments could be significant, specifically when it comes to data collection, participant communications and participant education. Locating and getting the information to those eligible could be challenging if they have left the company for an extended period of time and are not yet retired.

Retired employees also aren’t yet in the habit of taking lump-sum payments. They will have a lot of questions that require thoughtful, informed answers.

Therefore, plan sponsors will have to clearly explain why they are offering this buyout and be able to refer those who accept it to financial planners that can best advise the employees on what to do with their newfound funds.

We feel it’s a trend worth watching, as employers across the country will no doubt be looking at Detroit as an innovator for reasons unrelated to its yearly automotive product line.

Jeff Leonard authored this post while at Buck Consultants; he has since left the organization.

The European Court of Justice say “Non!”

The European Court of Justice say “Non!”

European Union (EU) law prohibits all restrictions on the movement of capital between Member States and between Member States and third countries. National provisions must not constitute a means of arbitrary discrimination or a disguised restriction of the free movement of capital and payments.

A judgment from the European Court of Justice (ECJ) earlier this month ruled that foreign investment funds which invested in French companies should not be liable to pay a discriminatory withholding tax on dividends, which was not levied on French based companies.

The dispute at issue concerned the French tax rules applicable to dividends distributed by companies resident in France to undertakings for collective investments in transferable securities (UCITS) which are non-French resident.

UCITS (special investment companies managed by a management company or investment company) enable any investor (shareholder) to entrust the management of his capital to a professional who is responsible for investing it on a number of given financial markets.

Under French tax legislation, dividends paid to non-domestic UCITS are taxed at source at the rate of up to 25%, whereas such dividends are exempt from tax when paid to French resident UCITS.

While the case was referred to the ECJ on a point of law, and we therefore have to await a final judgment in the French Court as well as any reaction from the French Government, the ruling could mean that, in total, UK pension funds could gain up to £500m on claims made between 2004 and 2009 on direct investments in France and exposure through investment funds.

Investment funds which have paid withholding tax at any time during the last five years will be looking to recover those payments.

France is not alone in this. Other EU countries such as Belgium, Germany and the Netherlands that currently levy withholding tax on foreign investment funds are unlikely to continue to be able to do so and may face similar claims to recover past payments.

For some Frenchmen it’s not been a good month!

I am the Managing Director of Buck Consultants in Europe. The opinions expressed here are my own, and do not necessarily represent Buck’s positions, strategies, or ideas.