SECURE 2.0 surprise: The ROTH catch-up contribution and ROTH employer match proposal
Congress proposes building on the Secure Act of 2019, with a list of changes to U.S. tax-qualified retirement plans, including catch-up contributions.
As the economic effects of COVID-19 linger and even intensify worldwide, multinationals face a difficult challenge ahead: how to find the right balance in their benefit programs to meet the changing needs of their employees and their business globally. How will companies manage their benefits going forward?
Multinationals have had to react quickly with changes to health plans, leave policies and other remote working programs to keep their businesses going through the crisis, and support the immediate health and well-being of their employees globally. However, many of these were temporary solutions. The current mix of pre-COVID benefits and recent changes are probably not sustainable or will not deliver what either employers or employees need in the post-COVID world. Most existing plans were designed for the past, not the future.
Admittedly, the future remains highly uncertain and most global businesses are still managing through the crisis. But smart organizations are also starting to plan ahead and revisit their strategies to secure the future success of their business after the pandemic—and the talent proposition needed to get there. It’s not about competitive advantage—it’s about survival.
Moreover, COVID-19 has been a massive shock—literally all over the world. It is presenting unprecedented challenges to the global economy, global health and well-being, social interaction and the future of the workplace everywhere. This has caused misalignments of current global benefits programs versus what employers want, employees value and the market demands. There is too much cost and too much at stake. Many global employers will need to go back to the drawing board to reassess what plans are affordable, appreciated, deliverable, sustainable and necessary.
But let’s acknowledge how difficult getting the right benefits balance truly is. No company ever gets it perfectly right, even in “normal” times. More change is likely on the way. Cost and resource pressures are already significant for most organisations and may get worse. Hard choices almost certainly lie just ahead.
Given all of this, plus the heightened importance of benefits in the employee value proposition and the significant cost and resources needed to deliver those benefits across the world, it’s critical for multinationals to start taking action now—to review and realign their global benefits to the future needs of their business and their talent, and to develop an effective model to govern and evolve their benefit programs over time.
It’s a challenging task, yet eminently doable with a structured approach.
Multinationals need to examine their current situation closely in order to drive the most effective and sustainable benefits programs for their business now and beyond COVID-19. We recommend breaking down the analysis into five areas, so that companies look at their benefits from all critical angles. This helps clarify what benefits are most important and which ones could be restructured. The process is aimed at analysing the current state of the company, what the priorities and opportunities are and what some of the challenges or barriers are getting in the way of progress.
Companies will have varying emphasis on the different angles depending on their own unique situation—such as industry, size and locations. Forward-looking multinational companies are looking at these five areas, asking key questions of the various angles to their programs:
Only by taking a 360-degree view will multinationals be able to sustainably design, deliver, and continually evolve their benefit plans to support their future business and talent needs around the world. With the huge pressure on businesses and resources, the margin for error is small, and the risks of getting benefits wrong are more significant than ever.
COVID-19 has already forced the hand of many multinationals to make immediate, and likely temporary, benefit changes all over the world to keep their businesses and employees going through the crisis. But now it’s time to look ahead—in fact it’s essential. Getting benefits right is a difficult task, but also an achievable one (even now), and it should rank high on a multinational’s list of priorities. It will ultimately make your company much more competitive, resilient and successful—and your current and future employees more engaged and productive.