Ensure your international assignees are not losing out due to currency exchange movements over time.
Are your assignees being paid 100% at home, or 100% at host, without a currency protection mechanism? If so they could be exposed to currency volatility which will affect their final income.
Application of the home-based balance sheet approach to expatriate compensation may result in specific implications related to exchange rate volatility. The ability to split pay in two (or more) currencies is often limited by local legislation or financial process barriers within an organisation. For example:
- Assignees paid 100% at home should be protected against currency movements on their host spendable income and any cash allowances that are meant to be spent in the host location.
- Assignees paid 100% at host should be protected against currency movements on the reserve portion of their net salary, as these funds are likely to be transferred back home.
How can Mercer’s Currency Protection Calculator help?
Mercer’s Currency Protection Calculator can help you proactively manage these risks in a fair and transparent way, using an automated process for retrospective currency reconciliation calculations.
The tool is fully customised to your specific requirements and policy principles (including pay delivery, frequency of package updates, cash elements provided and exchange rates used).
Get more information about Currency Protection Calculator
Please contact your local Mercer consultant or a member of Mercer’s Analytical Support Team for a free consultation and learn how the tool can help you manage your exposure to currency volatility!
Analytical Support Team