Contribution Processing: Empowering Plan Providers

1. Industry 4.0 – Sky is the Limit

Today businesses can move mountains, achieve unprecedented growth, and deliver unimaginable services at the speed of light. This is possible with the digital transformation that leverages Industry 4.0 technologies of cloud-based solutions encompassing artificial intelligence/machine learning, data analytics, and the like. But in the Defined Contribution space, legacy systems and transformation in silos make reaping the benefits to the fullest extent difficult.

This manifests itself in many ways. One of the key areas it is more evident is in contribution processing by Plan Providers.

2. Interconnectedness

In the retirement plan space, there is a strong interdependence between Plan Providers and Plan Sponsors who subscribe to their services. If we take just one aspect, contribution processing, there are a lot of dependencies on the Sponsor for the Plan Provider to be able to receive and manage the funds effectively.

2.1 Data Dependence

First, the Provider needs the Plan Sponsor to upload census data for their employees. This data includes comprehensive demographic details about the employees, including name, address, birthdate, joining date, the contribution details, any loan and repayment details, and so on.

Second, Sponsors may have different divisions, sub plans, or payment schedules, which the provider will have to manage. A provider with several varying data inputs and frequencies will need a very efficient system to ensure timely receipt of data, funding, and delivery of services.

Once the Sponsors submit their files, the Provider will have to ensure that the funds have been credited into their account or the check deposited; match the entry with the payment, and investments allocated to the participants proportionate to their eligibility.

2.2 Challenges

The data that the Provider receives needs to be in a format that is compatible with the Provider’s systems. However, Sponsors may send data in different formats, needing the provider to reconcile them all into their database format. Sometimes this is even done manually, which can be time-consuming and prone to errors. The alternative is the Provider forces the Sponsor onto a fixed format of their choosing, which can shift the burden and expense to the Sponsor and is not always the most customer-friendly option.

The data that is sent by the sponsors needs to be validated for accuracy and sanity. Data errors may manifest themselves in several ways, from missing or mismatched fields to exceeding plan and participant limits to operational errors in the plan or instances that contradict the plan rules or legislative and regulatory restrictions.

Many legacy systems use batch processing to collect and process data to determine errors. This is a time-consuming process and the error log is accessible only after the files are processed. Unable to provide self-service to Sponsors, the resources are completely tied down to managing the data validation activities for their clients. The Providers find themselves trying to balance their time with correcting data and customer service issues surrounding it as opposed to building relationships with their existing customers and being more proactive in servicing them. As a result, they are only able to provide the most basic services, which can be a significant impediment to their growth and can often be reflected in higher fees.

3. Cloud-Based Automation

Industry 4.0 technologies such as IoT (Internet of Things), data management, artificial intelligence, machine learning, and analytics can help resolve many of the problems faced by the Plan Providers. These cloud-based solutions can work with existing legacy systems while enabling validation and sanitization of data much faster. They can help resources resolve data-related issues quickly and focus on understanding how they can better their service offerings using analytics to gain insights. Other processes, such as fund allocation and disbursement, can also be made more efficient without much manual intervention except in decision making.

A modular platform such as CORE Payroll/Contributions Processing from Congruent Solutions is a dedicated solution for handling contribution processing to specifically address the challenges by the Providers and enhance the ease-of-use in plan administration. Built to align with the workflows of Providers, it works along with existing solutions to validate data in real-time, thus speeding up the data validation and integration process.

When a Sponsor submits the census file, the hub, which has the bank details of the sponsor, triggers a payment process, and captures the transaction details. This reduces the wait time to receive the fund as well as the manual verification and transaction matching needed to proceed to the next stage of allocating investments.

The Payroll solution enables the self-service feature, allowing Sponsors to manage their census and payrolls, freeing the resources of the Providers to analyze data and offer customized solutions. This also reduces the cost of administration, a benefit they can pass on to the sponsors.

About Congruent Solutions

Congruent Solutions is an experienced retirement plan solutions provider whose CORE platform offers a modular record-keeping platform to the Retirement Plan industry. The company has more than two decades of experience in the industry, which has given the team deep insights into the functioning and challenges faced by the sector. This experience and understanding have been leveraged to develop specialized solutions that can help the Plan Providers benefit from Industry 4.0 solutions while protecting their existing technology investments. Here, the Congruent’s expertise and focused training come to the fore as it can offer bespoke services based on the varying needs of the providers.

If you are a Plan Provider looking to make your contribution processing more efficient, contact us at info@cspl.com.


Date Published: April 9, 2020


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