Understanding trends in retirement around the world is crucial for global leaders to develop competitive benefits strategies and manage the expectations of employees planning for retirement. Research by the Human Capital Institute (HCI) found that, in 2015, flexible benefit administration was a key future HR focus. So allowing employees to choose a benefits plan that best fits their needs could be a valuable tool for driving recruitment and retention.

In the year to come, managing total compensation, including benefits, is projected to become the second costliest HR function. Retirement isn't simple, and in an increasingly global talent market and workforce there is unprecedented transparency surrounding global trends in retirement.

Global Trends

Globally, the "responsibility for financial security" post-retirement has overwhelmingly become an individual responsibility, according to Natixis research. Their data indicates that self-directed savings is now the most popular option for retirement planning worldwide. U.S.-based organizations have maintained a position in the top 15 percent of global organizations for retiree "health, material well-being, finances and quality of life," ranking 19th out of 150 countries worldwide for three consecutive years.

Natixis also reports that countries with the best post-retirement quality of life benefit from strong national finance, health care access and minimal income inequality.

Standard Retirement Plans by Region

On a global scale, a diverse approach for retirement planning has become common; however, there is a strong global trend toward self-directed retirement savings.

PricewaterhouseCoopers reports there has been a recent, multinational shift that is "the biggest change in benefits strategy we've ever seen," which can be attributed to longer individual lifespans, rising health care costs and increased regulation.

The result has been a drastic decrease in defined benefits for retirement, including pensions, and an increase in defined contribution plans. Worldwide, individuals in every region indicated current or future intent to initiate self-directed savings, according to a Nielsen report.

Asia-Pacific region

According to the Nielsen report, local bank accounts are used by 64 percent of the individuals surveyed, and 49 percent expect to receive a company pension, while 35 percent of individuals will use governmental retirement products.

European Union

The Guardian reports the European Union average pension is 50 percent of income, though many countries offer various health care, transportation and housing benefits to retirees. However, many pensions are in a state of change because of economic conditions.

Middle East and Africa

Per the same Nielsen report, 60 percent of individuals use local bank accounts for retirement, and 41 percent plan to utilize company retirement plans. Diverse retirement planning was especially common in these regions, with approximately one quarter relying on varied methods that include stock trading, investment-linked insurance, bonds and real estate investments.

North America

By comparison, some 58 percent of individuals in North America are utilizing local bank accounts for retirement planning, 38 percent plan to use company retirement plans, 33 percent plan to rely on stock trading and 28 percent plan to utilize bonds or private pensions.

What Is the Pulse of Global Retirement?

Studies by the Employee Benefits Research Institute (EBRI) indicate that, while confidence has risen slightly over the past several years, just 22 percent of workers are "very confident" they are saving at a sufficient rate for a comfortable retirement. Analysis of global retirement trends indicates that self-defined contribution plans have become the global norm, particularly as European pensions have fallen to historic lows. Given EBRI's correlation between retirement confidence and employee participation in self-defined contribution plans, savings could be a key for employees of all ages.

CHROs should work to educate a global workforce on the importance of self-directed savings as a tool for a comfortable retirement. While it may be difficult to accurately project possible changes to governmental retirement products, state-provided non-financial retirement benefits and other programs, CHROs can assist employees in understanding possible changes in the cost of living and the importance of savings.

Managing Employee Retirement Expectations

Managing the expectations of employees regarding retirement can be a challenge, particularly in the midst of a global shift. Despite the global trend toward reduction in organizational or government-issued retirement benefits, less than three-quarters of employees worldwide are using any form of retirement planning. Society for Human Resource Management research reports that "working in retirement has become the new norm." For some retirees, working post-retirement while drawing benefits is a natural by-product of longer lifespans and improved health. For others, it's a financial necessity.

Given global disparities, CHROs should accept there will be regional differences in expectations and adjust regional strategies accordingly. However, there is a clear global trend towards self-directed retirement savings as a primary resource for employees who do not want to work post-retirement. Organizations should assess how their total compensation packages and retirement support allow employees in regions worldwide to begin saving at an adequate rate to reach their retirement goals. While employees in some locations may qualify for state retirement, it's become apparent that governmental products can rarely sustain a similar quality of life to what employees enjoy while working. Saving is no longer a regional distinction, it's the new norm.

Because of vast regional differences in individual retirement planning and available government benefits, global CHROs should stay informed of complex global trends to manage employee expectations appropriately. With knowledge of employee benefit priorities and changes in retirement around the world, it can be possible to help your talent plan for the future.

Tags: Retirement Benefits Retirement global workforce