Digital Transformation is definitely the rage du jour – and for good reason.  Traditional business models have been assaulted as innovative companies radically improve performance and customer reach.  Digital advances such as analytics, mobility, social media and smart embedded devices are changing business models, customer relationships, and entire value propositions.As we commence the 2017 Public Retirement Information Systems Management (PRISM) conference in Nashville (April 9-12) and their theme of “Pension Digitalization”, we are reminded that the US public pension funds continue to face some serious challenges and exciting opportunities in this regard. 

Virtually every retirement system across the nation has engaged in pension reform over the last decade. Most reform is targeted at shoring up funding in response to the great recession and continued market uncertainty.  Other reform was aimed – and must continue to be aimed at ensuring that much of the middle-class Americans will be able to retire with dignity.

Rapid technology changes have led to the fall and rise of entire workforces – not many view lifetime employment as a viable opportunity now. The average lifespan of a person has increased, which affects the fundamental rules of pension schemes.  How Americans can plan their retirement better is a noble question and a target with monumental economic consequences on our nation.  Yes, achieving that goal requires increased financial sophistication and new products (State-sponsored IRAs and Savings plans – wink, wink) combined with purpose-driven leaders that are passionate and persistent.

So – how can Digital Transformation help in moving the needle towards a more holistic view of pensions?  Here are a few teasers:

Use of advanced technologies

• Enhancing actuarial processes with artificial intelligence and machine learning for real-time actuarial dashboards for proactive decision making.
• Exploiting advances in virtual reality to let participants experience different retirement realities based on data-driven financial models.
• Adoption of block chain (distributed ledger) for immediate clearance, immediate settlement and dramatic increases in straight-through-processing for inbound and outbound payments.

Improve processes and decision making

• Migrating to infrastructure on demand (cloud) to decrease labor, increase scalability, and pay for what you use instead of what you have.
• Using inbound and outbound micro-targeted marketing software and techniques combined with analytics to improve demand driven communications with participants.
• Mobile apps can also be leveraged to process transactions faster compared to paper processing and have a digital dashboard of all pensions in one place. Concepts of gamification can also be used to get millennials think about retirement and plan for it.

Increase efficiency

• Partner with other Federal, State and Local agencies to share information and drive inefficiencies out of wage and contribution reporting, child support enforcement, age/name change verification, and others.
• Acceleration away from “high touch” transactions such as face-to-face, telephone, and mail towards a preference for digital transactions – while simultaneously improving access, availability, and consumption of highly personalized information.

Educate members for better retirement planning

• Driving deeper member engagement through mobile apps and chat bots that fuse FAQs and personal data so participants can simply ask their device “How much will my disability benefit be if I leave work now?” or “How much additional money should I save to achieve 80% of my current take home pay.”
• Leverage big data to develop micro-targeted educational campaigns using social media to help participants, legislators, employers and other stakeholders understand the real value of their plans.

Many states are taking the necessary steps to become more digital and transparent. New Jersey recently signed a legislation which not only makes data transparency a requirement for all state agencies but also codifies the chief data officer position into state law.

The new Open Data Initiative aims to increase public awareness of and access to state agency data in order to enhance transparency and accountability, encourage public engagement, and stimulate public policy and public service innovation.

But much is still needed. Pension reform in the form of modernized IT systems is taking place, but what is required is a digital revolution; a new thought process requiring partnerships between governments, agencies and third parties to overhaul the pension value chain.

Do you have thoughts on how this can be achieved? I would love to hear them.

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 About Sagitec Solutions

Sagitec Solutions, LLC designs and delivers tailor-made pension, provident fund, unemployment insurance, and healthcare and life sciences software solutions to clients of all sizes. Understanding that a dynamic world requires dynamic technology, Sagitec offers solutions that are highly configurable and extensible by nature. With deep industry experience in software implementation and systems integration, project management, consulting, hosting and software support, Sagitec is a partner clients can trust to deliver mission-critical IT projects.