This article was first published in the April release of Benefits and Pension Monitor.
Over the past few years, there has been a significant and noticeable shift in the pension and benefits industry when it comes to systems administering their plans. The demands of organizations have moved from looking for an administration system, or administrator, to a modernization approach. Not only has the shift moved in terms of terminology, but there has been a significant increase in demands to modernize. We, at Sagitec alone, have received more than double the demand for modernization projects in 2020 versus the same period in 2019. What has prompted this shift in wording, increase in demand, and what are the benefits of modernization?
Many pension and benefits organizations implemented their systems in the late ’90s and early 2000s. While they still do the job and we have gotten by to date, the pace of modernization was slow until the COVID-19 pandemic hit earlier this year. Lockdowns and remote working exposed the shortcomings of some of these legacy pension systems. Data security, privacy, remote access are all issues that we see continually asked as high importance not only to plan sponsors, but members and boards as well. Straight-through processing, automation, and digitizing data are the best practices required from a modern system, not paper files or wet signatures.
Other factors are also contributing to the shift in approach and culture. In Canada, there is a smart and growing trend of jointly-sponsored pension plans (JSPP) and the ever-present multi-employer pension plans (MEPP). As these plans continue to grow and acquire new plans and new employers, a robust system that can adapt to modern challenges is imperative to success.
Today, these types of plans require robust reporting, easy to use employer portal websites, flexibility to add plans/employers, easy to use member self-service sites, and, most importantly, ensuring that case management and workflows are all encompassed in the tools. Plan members expect calculations and information to be provided quickly and via their phones or desktops instantaneously, and modern technology is at the crux of these demands.
By updating the technology used to administer pension benefits, pension agencies/administrators can ensure financial security while simultaneously achieving customer service excellence.
Below are a few areas where, over the past number of years, technology modernization can help pension plans achieve their mission-critical goals:
- Invest in a Platform Solution that Continuously Evolves and Improves
Considering the complexity and constantly changing nature of retirement laws, pension agencies should strongly consider replacing their legacy systems with technology that can easily evolve and scale. Strategic investments in modern technology are also fiscally responsible. According to an article in ‘Government Technology,’ “Government at all levels remains shackled to legacy systems, which can account for 70 to 80 per cent of IT dollars.”
- Improve Member Centricity
There are incredible opportunities to improve member experience through technology. Focus on technical solutions that utilize multiple communication methods to ensure your agency keeps pace with other service industries. This means a chatbot or live-chat integrated within web self-service portals, mobile-based offerings, and member surveys, among other things. Sophisticated service delivery levels are a trend among pension agencies, with 51 per cent of pension agencies polled in the ‘2019 NCPERS Public Retirement Systems Study’ stating they have already updated or enhanced their web portal for members to access their information.
- Enhance Member Communication and Outreach
A pension administration solution should illuminate member benefits and foster retirement readiness by offering full-service retirement planning tools. Look for member self-service portals that offer personal wealth management features. These tools help members visualize the impact of contributions and other deductions on their paycheck, while also providing a holistic picture of their personal wealth by combining other retirement accounts into one dashboard.
- Bolster Organizational Efficiencies
To help you achieve operational cost effectiveness, pension administration systems should leverage automated workflow management to the greatest extent possible. This functionality improves internal efficiency and the associated metrics and reports promote continuous process improvement. Modern solutions should also incorporate knowledge management and organizational learning to ensure staff has the necessary information and tools to perform their jobs competently.
- Cloud Hosting Options
Considering the prevalence of cloud hosting, look for a pension administration solution that will allow your agency to adopt an infrastructure on demand approach. By hosting your solution on the cloud, you can decrease labour, increase scalability, and pay for what you use instead of what you have.
- Increased Paperless Processing
As we become a more paperless society, the demands of pension plans and their memberships have followed suit. Increasingly, the industry needs to look at electronic signatures, reduce the use of paper files, and accomplish as much straight-through processing as possible.
- Mobile Applications
According to research from PEW, 53 per cent of Americans aged 65+ own smartphones. People of all demographics are using smartphones for most of their needs. The industry needs to progress and meet the demands of not only the millennials, but baby boomers as well. Robust and easy-to-use mobile applications have become the norm amongst providers and can be used as a marketing tool to current and future employees.
Where to Go From Here
The points highlighted above are just a few ways in which technology can help pension agencies become digital and evolve with time. The reassuring thing to know is that not everything needs to be done today or tomorrow. Many solutions exist and you can work on identifying areas of improvement and significant pitfalls. Once you have a change management plan in place, you can implement one or many solutions simultaneously, as you would with building blocks. For example, you could move to the cloud first, incorporate a CRM tool, or implement employer reporting, all while building on your complete vision of the future!
Kevin Lynch is the Canadian Business Development Director at Sagitec.