If your company sponsors a defined benefit (DB) pension plan that covers 500 active employees or more, you’ve probably already concluded that a customized pension administration system can help save significant pension administration costs.
If not, you should ask for proposals and see for yourself how much you could save. Not that long ago, such systems were so expensive that only sponsors of large pension plan could afford to have one. Nowadays, many more plan sponsors may have their own system and start realizing significant savings after only a few years.
The pension administration systems that are offered on today’s market are more flexible, easily programmable and they operate on affordable web platforms. These technological evolvements mean that customized pension systems can now help many more DB pension plan sponsors streamline their administrative processes and therefore, save on their pension administration cost.
Better financial outcomes for employees, too
A pension administration system can enhance your current pension administration practices, particularly managing the plan membership database. More accurate, real-time data can help address all kinds of queries, produce more accurate calculations. A system will also let you easily perform the required regulatory annual administrative tasks.
But the advantages extend as well to your employees in the plan. Many articles discussed the fact that many employees are emotionally stressed and distracted by financial worries. For example, a recent Benefits Canada article stated that 60% of employees are in this situation. This should be a big concern to employers, especially since we know that stressed employees tend to be disengaged and that employee engagement is a key to the success of a company.
A significant advantage of having a customized pension administration system is that your employees will be able to plan for their retirement, easing their worries about how to achieve a secure retirement. With a retirement planning tool that can easily be added to your administration system, your employees can project their DB pension to different retirement ages, which is critical to their retirement planning. Many such web-accessible retirement planning tools also incorporate other important aspects of a sound retirement plan, such as future income from personal savings, government benefits, and other deferred pension entitlements.
Two keys to success: Awareness and measurement
Employees who understand and therefore better control their future financial situation are less stressed and consequently more engaged, which in turn benefit the company. Whether you already offer a retirement planner or have made the decision to offer one, you should ensure that your employees are aware that the tool exists, know how to use it, and understand how they can gain from using it. A strong employee communications program to that effect would certainly be a good investment.
Finally, you will want to measure whether the retirement planner effectively increased your employees’ engagement. There are various measurement methods. You could develop specific employee surveys, or add questions about employee utilization and appreciation of the tool to your annual employee opinion survey. You could post similar questions to employee social communities, or raise them in specially formed focus groups. You could obtain information on the number of clicks to the retirement planner and ask for feedback before and after its use.
I am very confident that you will see that your employees will feel more comfortable about their finances after having used the retirement planner, especially since they are members of an employer pension plan.