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Innovator Winner

Global retirement strategy guides DC growth for American Express

Barbara Kontje and her team created a global DC template for Amex’s 28 markets.

American Express is taking its pioneering spirit in retirement planning global.

Barbara Kontje, director of retirement for the Americas and Smart Saving at American Express, and Mai Lam, Paris-based director for international benefits, set out to make the company's DC plans worldwide more robust. Those efforts earned Ms. Kontje and her team a 2015 Innovator Award.

With about $5.5 billion as of Dec. 31, total worldwide DC assets at American Express are more than double that of its defined benefit plans' total, and are growing at a quicker pace. Yet from a risk management perspective, DC didn't have the same coordinated efforts as DB.

One main reason is that DC plans usually are administered at the local level, partly because of the differing regulations governing different markets. Nevertheless, American Express executives believe a set of shared best practices can help achieve better outcomes for plan participants, Ms. Kontje said.

They came up with a global retirement framework to spell out guiding operational principles for all 28 markets worldwide where the company offers defined contribution plans.

“What we'll see is more consistency across our markets, for example, in terms of governance, in terms of investments, and in terms of how we communicate with members,” Ms. Kontje said. ”What works in the U.S. may help more emerging markets.”

Ms. Lam, who spearheaded the initiative, said plan executives were aiming for “a global philosophy that could be applied consistently across all markets to manage retirement plans.” The judges felt that was unique for multinational corporations.

American Express' reputation dates to 1875, when it was the first U.S. firm to offer a corporate pension plan. It is also the only company to have won a P&I/DCIIA Innovator Award twice, having previously been honored in 2012 for its Smart Saving program.

Last year, the company organized its inaugural Global Retirement Summit, which gathered plan executives and external advisers to come up with a blueprint covering DC management, including investment strategies, governance, compliance and member communication. “We wanted to bring about a common, consistent experience with retirement planning regardless of where employees are based,” Ms. Lam said.

Plan executives globally will be guided by seven general operational principles, with each jurisdiction to set individual short-term and long-term goals. For example, the company's global retirement strategy called on plan executives to conduct a review of the available investment options, plan design and fee structures at the local level at least once every three years.

American Express also introduced a virtual community of practice for its plan executives worldwide to share experiences and develop common solutions. Members meet virtually quarterly to monitor progress.

It's too soon to measure the initiative's success, but early signs are encouraging. Already executives in India, for example, have taken a page from the global framework to strengthen DC plan governance, Ms. Kontje said.

As the global retirement framework matures, Ms. Kontje expects it will be combined with Smart Saving.

The latter, an employee financial wellness program, was introduced in the U.S. in 2010. Since its launch, DC participation rates in the U.S. increased to 82% from 70%. Deferral rates also improved, to 8.2% from 7.2% during the same period.

The company is in the process of rolling out Smart Saving worldwide, with the global retirement framework as its cornerstone.

Ms. Kontje added: “Retirement security should be the cornerstone of any financial wellness program.”

In their own words

This article originally appeared in the November 2, 2015 print issue as, "Global retirement strategy guides DC growth for American Express".