International HR Actuarial Services
International Pension Finance Support
CLCIC has actuaries on staff who are experienced in valuation of international defined benefit retirement obligations and application of US accounting standards to non-US retirement and severance obligations, including cost analysis of restructuring programs. Our services include calculation of annual accounting expense in accord with USGAAP and consolidation of pension accounts of multiple countries into a centralized report in a single currency for the company's annual financial report.
We provide support for plan changes through customized benefit projection models, allowing international benefit managers to analyze complex changes in retirement benefit formulas, e.g. from Defined Benefit to Cash Balance or Defined Contribution type.
Through our actuarial valuation services, we support companies in assessment of the funded status of their retirement plans, and allocation of future contributions among underfunded plans. Actuarial valuations are based on specific plan provisions and detailed employee and member census data. We work with local management to establish realistic economic and demographic assumptions, in order to provide the best reading of the company’s retirement obligation and funded status.
In limited situations, IRS rules allow a tax deduction for foreign unfunded pension plans. We provide actuarial valuations under Section 404A of the tax code to determine the allowable deductions.
International Staff & Mobile Executives
For employees assigned to work outside of their home country, pension provision is a primary concern of both management and the transferred employees. Why? To protect the employee’s ultimate pension benefit against loss due to subsequent assignments. In many countries, pensions are provided through a combination of government, industry and private programs. These structures are often complex and are rarely similar country to country.
CLCIC Advisors have substantial experience in assisting clients in resolutions. We analyze home country and host country (country of assignment) pension structures and provide explanations and financial effect of the various structures. Our consulting is supported by graphs with interactive options to allow the client to immediately view the impact of alternatives, e.g. credited past service, investment return, definition of covered pay in determining the pension benefits.
Merger & Acquisition Services
The need for intelligence about a target company’s employee benefits and related financial risks is obvious. Initially, the acquiring company may have expectations regarding the target company’s employee benefits in terms of acquirer’s benefit structures and costs. In reality, benefit structures and costs vary widely by company, especially when the target is a non-US entity.
Due diligence for a possible merger, acquisition or joint venture often progresses through phases, with each successive phase broadening the circle of management and advisors. Two common characteristics are high confidentiality and an intense time schedule.
CLCIC Advisors actuaries have been significantly involved with employee benefits in acquisitions and joint ventures. Our experience covers acquisition targets in most of the Euro area, Scandinavian countries, Japan, Australia, Korea, Hong Kong, South Africa, Brazil, Canada, and the US. We have local actuary contacts in most countries to provide on-the-ground expertise regarding benefit structure, statutory accounting, and funding rules.
Our due diligence reports assess pension and other employee benefit liabilities and costs, funded status, responsibilities for pension liabilities after an acquisition, estimated future expense and funding requirements. We provide explanations of benefit programs to the M&A team. Based on the best possible understanding of the target’s employee benefits, especially accrued pension obligation, the acquirer may elect to:
- Proceed as planned,
- Request additional information or clarification of data from target,
- Negotiate an adjustment in purchase price, with the funded status to be measured post-closing, or
- Disengage from pursuing the acquisition.
When an acquisition or joint venture is completed, we provide pension calculations for purchase accounting entries. We also assist with integration of employee benefits programs with acquirer’s plans and service providers. If the acquisition is multi-national, integration may vary by county, e.g. continue some plans on a stand-alone basis, and combine others into acquirer’s existing plans.