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Modernized Pension Administration: Five Critical Automation Advantages for Public Sector Entities

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  • On: 08/24/2023 14:29:57
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By: Todd Flessner, CBIZ

While the administration of public pension plans has evolved through the years, many public sector entities aren't fully optimizing the advantages of automation, with some still relying on manual processes and spreadsheets. When evaluating the capabilities of a modernized Pension Administration System (PAS), here are five critical automation advantages to consider.

This is an excerpt from NCPERS Summer 2023 issue of PERSist, originally published July 18, 2023.

Traditional pension plans remain the norm in the public sector industry. Today, there are more than 5,000 public sector pension plans in the U.S.
While the administration of these plans has evolved through the years, many public sector entities aren't fully optimizing the advantages of automation, with some still relying on manual processes and spreadsheets. When evaluating the capabilities of a modernized Pension Administration System (PAS), here are five critical automatic advantages to consider.

1. Increased Accuracy and Efficiency

The automation of administrative tasks and processes can significantly improve accuracy and efficiency. Modern PAS platforms bring all the plan's data together in a centralized pension database. Along with the benefits of the initial data clean-up, a PAS can also provide user-friendly tools that streamline ongoing data imports.

PAS platforms automate pension calculations based on each plan's unique and often complex rules. Automation of calculations increases accuracy and reduces administrative time dedicated to calculations and verifications. Through automated administrative processes, the system is able to initiate, calculate and process monthly pension payments, and then automatically complete payment reconciliation between the PAS and the payments made.

To optimize current PAS capabilities, your system should also provide user-friendly case management/workflow that helps to streamline:

  • Day-to-day management and tracking of participant requests and transactions

  • Electronic storage of correspondence and historical documents

  • Customizable workflows that trigger based on data updates, status changes or upcoming milestones

2. Reduction of Risk

The enhancements in accuracy and efficiency reduce the inherent risks associated with pension plan administration. Having an automated process helps to ensure plan provisions are consistently applied, data updates are timely and calculations are correct. This reduces the opportunity for data inconsistencies and overpayments. Today's PAS platforms provide the ability to produce on-demand calculations using real-time participant data and the flexibility to make adjustments as plan rules change.

The streamlined processing also creates increased transparency through detailed data audit trails, showing when changes were made, who made them and the resulting new values. The increased transparency ensures issues can be quickly identified, addressed and minimized. The detailed information also assists with internal and external audits.

3. Enhanced Data Security

Pension administration involves extensive private information that must be protected. Your PAS should provide end-to-end data security that's compliant with the Department of Labor's cybersecurity guidance. System security should enable different user access levels based on roles. Data access and actions can be defined for each level, helping to protect sensitive data. All access to the system by administrators or participants should always require multi-factor authentication at login.

When evaluating PAS platforms and plan providers, do a deep dive into their cybersecurity practices, procedures and track record. Ensure that contracts include ongoing compliance plans to keep pace with changes in security standards and detailed action plans in the event a data breach occurs.

4. Comprehensive Reporting

Modern PAS platforms do more than centralize pension data and administration. Today's systems include powerful, robust reporting tools through simple, intuitive reporting dashboards and report generation interfaces. Users can quickly and easily produce standard reports, create customized reports based on plan needs or perform ad-hoc queries. The single source of plan data ensures accurate, real-time reporting and enables reports to be generated automatically for ongoing monitoring.

PAS automation also streamlines the annual data extract required by plan actuaries to calculate pension liability. Built-in validations and verifications save time for both actuaries and plan administrators by minimizing questions and separate data requests.

5. Convenient User Access

Modern PAS platforms also provide valuable participant-facing capabilities that make information easily accessible and user-friendly. Today, participants expect secure, online portal access to instantly access information about their pension. Pension portal experiences include access to plan information and pre-filled forms, real-time calculation of current or future payments, and secure self-service options. These robust capabilities enable participants to complete tasks like making online retirement elections, updating beneficiary information or maintaining tax/banking information.

Fully automated systems also enhance participant experiences by giving plan administrators the ability to automatically trigger personalized communications to members as the system recognizes defined changes in employment status or upcoming age milestones.
About the Author:
Todd is a vice president of pension administration with the Retirement & Investment Solutions practice of CBIZ, Inc. He provides management and support for pension administration and is responsible for the implementation of new client accounts, complex pension calculations, special projects and new business development. Since 1994, Todd has experience managing teams that provide pension and benefits administration services for clients of all sizes.


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