Public pension organizations should focus on the following to prepare for the defined contribution transition:
1. Taking Care of Members—and Their Retirement Security
The defined contribution transition will reinvent customer service in pensions, deepening member relationships. As members transition to defined contribution plans where they must make investment decisions, pension entities will enter a whole new coaching paradigm where fostering members’ financial literacy is paramount and essential to protecting their retirement security.
2. Managing Change—and Reshaping the Organization
Change management will be a significant and continuous focus for pension organizations throughout the defined contribution transition. The foundation of this will be staff reallocation and education initiatives. The current emphasis on back-office, transactional tasks will be replaced by new far-reaching customer service and member education needs. The focus will be on understanding the right resource mix and staffing appropriately, so that existing staff is optimally allocated and skill gaps are filled.
3. Driving Innovation—and Working in New Ways
The changing relationship between pension organizations and members will drive the need for innovation. Not only will members want more real-time communication, they will look to digital channels, including mobile, to review and make changes to their account. Meeting members where they are will take on a whole new meaning and urgency.
4. Integrating Technology—and Making the Right IT Investments
Direct contribution plans require a higher level of integration to external systems compared to direct benefit plans. As such, pension organizations will need to make changes that may go beyond the experience of their IT staff as they address the integration architecture and security issues associated with the real-time exchange of data.