Case study: Administration outsourcing as a path to communicating retirement plan value

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By Stephanie R. Sorenson | 15 December 2011

The challenge

Milliman was contracted by a Pacific Northwest company to administer their hourly and salaried pension plans. These plans had been in place for more than 50 years and had always been administered in house. The company had previously considered outsourcing, but they were reluctant to give up their personal touch and service. However, data issues hampered pension administration. Over the years, the company had upgraded their HR/payroll systems several times. With each upgrade, only current data was moved to the new systems. As a result, the historical data was housed in four different databases and the company was struggling to consolidate the data needed for pension administration. In addition, retiree data was not current on the company’s systems and the vested benefits of past terminations were not reliable. As a result participants experienced a six to nine week turnaround for estimate and retirement requests. The unreliable data also ruled out any opportunity for online tools. While the company’s in-house administration produced accurate retirement calculations, the data structure, long turnaround times, and lack of participant tools led to the decision to outsource the administration.

The company also wanted to take advantage of Milliman’s total retirement planning tool, PlanAhead for Retirement®, and actively promote the value of all the retirement plans the company offered, including defined benefit pension, defined contribution, and non-qualified benefits.

Milliman solutions

  • We suggested a phased implementation, starting with the administration of those groups where data was reliable. This allowed the company’s HR staff to research and correct participant data that was questionable.
  • A Milliman team met on-site with the company’s HR and IT staff. Each system was reviewed in detail to identify the data items needed for outsourced administration.
  • We accepted multiple files from each of the company’s databases and consolidated the files into one format.
  • We received a file from the pension payment trustee. This information was used to load and verify retiree data and in-pay amounts.
  • We worked with the 401(K) vendor to set up a process to receive monthly data files. The data received is uploaded into the PlanAhead retirement planning tool, and is also used to verify the 401(K) population.
  • We worked with the company’s IT staff to develop a periodic data load that would provide data not only for pension plan participants but also for the 401(K) plan participants.
  • We reviewed all 401(k) and non-qualified plan documents to accurately program and test the retirement planning tool.
  • Our communications specialists worked with the company to design a campaign targeted to promote the company’s full spectrum of retirement benefits and promote the use of the on-line tools.
  • Milliman provided a website that the company could use to promote the retirement tools for its entire HR staff at several different locations.

Results

Milliman began administration of the company’s retiree population in the spring. This was followed by the active populations by the end of the year. The administration for the terminated vested participants was turned over to Milliman the following spring.

Milliman currently provides retirement calculations and estimates to all participants with an average turn-around time of three days. Participants also have 24-hour online access to a pension estimator and a total retirement planning tool that is prefilled with their current pension, non-qualified, and 401(k) balances. By teaming up with the Milliman administration and communications staff, the company is now able to provide online total compensation reports to all employees.

Milliman also provides a Plan Sponsor website to the company’s HR staff. This helps the company in their desire to maintain their personal touch. From this site, the company can view all of the pension participant data, access the pension estimator for any participant, and run standardized or ad hoc reports.

The company is pleased with the services provided by Milliman and is actively promoting the retirement benefits it provides to their employees.