Over the last 25 years, the pendulum in the public pension industry has been swinging from Defined Benefit (DB) plans to Defined Contribution (DC) plans. Powerful advocates in the government and financial sectors have proclaimed that DC plans are the key to reforming a broken pension industry, regardless of the state of the economy. In a bear market, DB plans are unsustainable they say. They put state and local agencies on the path to inevitable failure. On the other hand, in a bull market, DC plans significantly outperform DB plans. Why wouldn’t a pension fund want to follow the DC model?

Implementing a new pension administration system can be one of the most significant investments a retirement plan ever makes. Between consulting fees, software licensing, training, and support, there are a multitude of factors that will impact the price tag of a system replacement project. With retirement funds under increasing pressure to do more with less, it is absolutely essential that plan administrators make smart choices in IT investment. This means thoroughly understanding the goals of the project, communicating clearly the expectations of the new system, and being realistic about the constraints in your resources. For those considering IT modernization, take in mind that the following factors will impact the cost of your project. 

#1. A Massive Swell of Retirees will Stretch your Administrative Capabilities to the Limit

Replacing pension administration systems in the public sector differs in a number of ways from private sector projects.  These differences are important to keep in mind both when embarking on a systems replacement project and when selecting a pension system replacement vendor.