Conversations with a few top record keepers in the retirement savings space led us to a predicament, which, albeit not too frequent, is but of significant importance in the retirement industry.

While day-to-day recordkeeping woes have mostly been addressed through currently available off-the-self solutions or through custom built applications thereby making a sponsor’s life relatively easy, there still remain a few problem areas in plan conversions and migration that require attention from the SME (Subject Matter Expert) fraternity in the retirement domain.

Let us look at some scenarios–

  1. Towards consolidation, a top record keeper has just acquired its competitor and inherited hundreds of plans. If both the record-keepers have been using the same software solution to manage the plans, it is relatively easy for the administrators to manage the acquired set of plans post acquisition or merger. However, reality could be quite opposite and probability these record-keepers would have been using different systems. Strategically, the merged entity would like to cut operation costs and increase efficiency by migrating plans from one to the other better system.
  2. A top record-keeper has been managing several hundreds of plans on legacy platform. To remain competitive and achieve operational efficiency, the management decides to have a technologically advanced solution and migrate all the existing plans to this new system.
  3. In many a case, recordkeeping solutions currently in production, have evolved during past few years. What it means is that various processes (e.g. eligibility, enrollment, payroll, loans, withdrawals, hardship, vestingetc.) within the recordkeeping ambit have been built progressively and could be hosted on different systems and integrated to work as a unit. Even the technologies employed to develop these progressive units may very well differ. This scenario does not augur well since it does not provide a competitive advantage in maintaining and operating these systems.

The list here is indicative but, by and large, it covers the pain areas associated with plan conversions.

Look closely at these to analyze the underlying problem. What comes out is migration of plan recordkeeping data from one system to another system or from multiple systems to one system. Couldn’t it just be a data migration project? Why would one be so worried about data migration while best tools are available in the Industry and examples have been set by successfully executing large data migration projects? Let’s try to find out the reasons.

The specific nature of recordkeeping in retirement space encompasses the following –

  1. Complexities in the plan rules attributed by IRS and DOL regulations
  2. Complexities in the constituent processes (e.g. eligibility, enrollment, elections, payroll, loan, vesting, hardships, withdrawals, transfers etc)
  3. Interdependencies of the different processes and based on plan rules
  4. The need for high integrity and accuracy of data as the consequences of not doing so could be catastrophic for sponsors
  5. Specific differences in the way different systems store their data, the differences between their processes and workflows and the need for complex transformations of data as it moves from one system to another
  6. The need to train administrative resources in the new platform or system

To summarize, record-keepers need a solution that could help them in on-boarding large number of plans from one or more systems to another system (or vice versa) while making sure that data integrity, adequacy and accuracy remains of high standard and data validations adhere to the specified plan rules. A desirable system that could address these concerns should encapsulate the following –

  1. Capability to configure and house the plan rules as per Plan Document in accordance with IRS & DOL guidelines. A system would need this to ensure that data validations must be carried out as per set plan rules. Similar data sets may very well have different validations corresponding to different plan rules. Configurability is important here as it would facilitate changing the plan rules as per need and without consuming much effort.
  2. Capability to integrate different processes within plan administration. This would ensure the validity and integrity of the data for the same participant getting consumed at different processes.
  3. Capability to handle a process standalone as there could be a need to bring in data for individual processes. This could be seen in contrast to the above point, but there comes integration capability of the system.
  4. Capability to handle different file formats and allow data transformations including lookup and custom rules.
  5. A simple and intuitive user interface which by design itself could eliminate possibility of mistakes by the user and make administrator’s job easy. This is one of the element which often gets missed where the solution looks much technical than business user friendly.
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