This piece was developed and written by the Governing Institute Content Studio, with information and input from Accenture.
Boosting plan efficiency while improving services for members and retirees
Public employees increasingly want to know retirement administrators are applying best practices to protect retirement plans and they desire easy access to information about retirement options, as well as coaching to help make investment and retirement decisions. These demands create new challenges around an essential but often underappreciated component of pension reform: benefits administration. This guide offers a formal framework for transformation of pension plan administration through modernizing workflow processes, investing wisely in new technology, and serving the needs of internal and external stakeholders. With a framework in place, administrators can contribute to the long-term viability of retirement programs and better meet the financial needs of public retirees.
Growing challenges for pension administrators
The stakes are high when it comes to reforming pension administration. Well-run retirement plans are an important reason why talented employees join the public sector workforce. In a 2018 Accenture survey of 2,800 public and private employees, 78 percent said pension benefits are critical to accepting employment and 73 percent stay with an employer because of the retirement benefits offered.
Administrators at the largest state-run pension programs are no strangers to challenges—for decades they’ve serviced hundreds of thousands of members and overseen millions of dollars in benefits. But even these seasoned professionals say nothing compares to the challenges that have intensified over the last decade due largely to four
- Growing structural complexity
- Changing roles for administrative staffs
- New customer engagement demands
- Ineffective legacy technology
Opportunities for retirement systems: The impact of transformation
To address these challenges, many pension systems have launched initiatives to modernize processes, technology and organizational cultures. Here’s a look at how forward-leaning organizations are achieving immediate results from their transformation efforts and creating a foundation for long-term improvements.
- The value of automation
- New operational insights
- A better customer experience
A four-step approach to transforming retirement administration
The unique needs of each public sector retirement program require administrators and their staffs to tailor transformation plans accordingly. Still, executives experienced in modernization projects point to these critical steps for success.
- Define the business case.
- Start with process modernization.
- Capitalize on technology innovation.
- Empower people inside and outside of government to embrace change.
Transformation never ends
Pension reforms, an onslaught of new retirees, digital innovation and shifting end-user expectations—these all add up to ongoing changes for the foreseeable future and new challenges for retirement plan administrators. Along with the complexities that arise with change, savvy organizations are uncovering a wealth of opportunities to improve their programs.
But successful transformation requires a formal framework for modernizing workflow processes, investing wisely in new technology, and serving the needs of internal and external stakeholders. With a framework in place, administrators can address the operational imperatives that contribute to the long-term viability of retirement programs and meet the financial needs of public retirees.
Above all, modernization must be approached holistically, considering the people, processes and technologies that make up the pension ecosystem.
“Stakeholders need to optimize several dimensions in parallel: the business operating model, the IT operating model and the delivery model for how they work with customers, employers and others,” Accenture’s Davies says. “I’ve never seen a case where fixing one of these elements was enough. Pension organizations have to see the complete picture so they can optimize each of these areas simultaneously.”
Now’s the time to push ahead aggressively on this journey.
“I suspect that fundamental changes in government retirement programs are the new normal for us,” says Bishop, director of the Virginia Retirement System. “This is not a project that will have an end, but will serve as a launching pad for continued progress.”