The news article entitled Nestle cooks up new combo which is released during January 2007 reports one emerging trend in pension management that is adopted by one the top players in the global business arena Nestle SA. Starting this year, the multinational corporation took a huge step in the management of its global pension assets by launching Nestle Capital Advisers (NCA) which will serve as a one-stop shop for its 280 plans around the globe.
The NCA’s main goal is to “extract economies of scale and to better monitor global pension plans by sharing administrative services, financial reporting, risk management and performance measurements” by integrating pension related administrative and financial management operations (Hua 2007). It can be recalled that Nestle SA is one of the pioneers in cross-border pension asset pooling yet it still emphasizes the importance of local independence among plans (Hua 2007). It should be noted that the company still gives choice to its subsidiaries whether to employ in-house investment team or outsource the service.
This move of Nestle is in sync with the worldwide trend of companies integrating their pension management in order to improve efficiency and reap cost advantage. However, companies participating in this transformation also face the challenge such as legal barriers, high cost involved, cross-border legal conflicts, and opposition from local trustees (Hua 2007). Amidst all these challenges, the global world is expected to witness an increasing trend of consolidation backed by the prospects of huge cost savings from economies of scale.
The creation of NCA is projected to improve Nestle’s operational efficiency through shared-service approach which eliminates duplication. Even though the company is hesitant in giving figures, it is estimated that cost savings from global pension asset pooling is on a double-digit basis point.
References
Hua, T 2007, “Nestle cooks up new combo. ” Retrieved 01 December 2007, from http://www. pionline. com/apps/pbcs. dll/article? AID=/20070108/PRINTSUB/701080727/1031/TOC