Streamlining the Contribution Processing lifecycle of the Defined Contribution plan administration
Many of the large plan providers, with decades of experience in Defined Contribution (DC) plans, Deﬁned Beneﬁt (DB) plans and Non-Qualiﬁed plans administration are maintaining multiple legacy systems for managing the contribution process. These disparate systems are supported by error-prone manual intervention processes. The decentralized, non-standard contribution management process and rigid architecture of legacy systems are impairing these organizations’ scalability and flexibility to support the payroll volume surges.
A Business Process as a Service (BPaaS) solution using a single standard system (with a configurable rules engine and a consolidated workflow) will be the ideal solution. It helps in streamlining the end-to-end contribution process effectively, with a capability to slash the operation costs by 30 – 40 % and push the service levels up by up-to 30%
Plan provider organizations use multiple legacy systems and stand-alone applications for managing the full cycle of contributions processing for the DC and DB plans. Problem is that they don’t have a single data source for these multiple systems. Data is held on different applications, databases, individual spreadsheets managed manually by plan sponsors, payroll providers and other third party service providers. Manual intervention across the contribution process like contribution calculations, contribution matches, mapping wire transactions etc., are making the contribution process time consuming and susceptible to more errors. Plan administrators are juggling between various systems and even vendors for the information on contributions, loans, new employee additions, eligibility etc. This manual pull and push of relevant data from different sources is increasing the risk of incorrect enrolments and payouts, leading to compliance issues. As plan provider organizations acquire new plans and introduce new products, the decentralized plan administration process and lack of standards, makes the lives of plan administrators tougher by the hour. To remain competitive, plan provider organizations have to streamline the end-to-end contribution process and standardize the policies and processes to achieve a true ‘Straight through Processing’ with low error rates, fewer system issues and minimal manual intervention.
After a thorough study of a company’s contribution management processes, workflows, systems supporting the contribution processing and the overall architecture, a BPaaS delivery model can be designed to meet the plan administrator organizations’ requirements with a single standard hosted system to handle spiking payroll volumes, and varying business and compliance requirements.
An ideal BPaaS Solution includes an integrated contributions management platform ( a single standard hosted solution covering end to end process), encompassing back office transaction processing, application and infrastructure development and support, and procurement of any required licenses. Contribution management processes can be moved to a shared service center operating on SLA driven KPIs. Considering the strategic needs of the company, advanced modules required for the data automation around the contribution processing, such as file mapper ( to handle payroll files in various formats), cash management ( to handle ACH, funding instructions etc.) can be implemented to further strengthen the contributions processing.
1.Redesigning the processes and workflows based on best-in-class processes and industry benchmarks to drive productivity, accuracy and user experience (plan administrators, sponsors and other stakeholders)
2.Implementing an integrated platform that consolidated multiple legacy, stand-alone systems by using a standard solution that covers end to end contribution management process
3.Achieving a true ‘Straight Through Processing’ by automating the end to end contribution management process
4.Implementing self-service portals for all the key stakeholders, to facilitate communication, file management and real-time error correction
A fully integrated BPaaS solution can greatly reduce duplication of effort and manual intervention associated with retirement plan administration. Not only does this assure accuracy and compliance, it also helps the plan providers control the cost and complexity of the administration and paperwork that contribution processing requires.
In an internal study, Congruent Solutions held detailed discussions with CXOs, IT and business teams of five plan provider organizations, ranging from medium (participant base of approx. 400,000) to large (2,000,000 participants or more), and studied their applications and processes related to contribution processing. From the initial observations made, Congruent has estimated the time savings that can be achieved in each of these activities, through a BPaaS solution:
The transition from a traditional BPO model to the BPaaS model can help the plan administrators to fix the issues related to decentralization, manual processes, and operation volume surges. BPaaS’ multi-tenant single standard platform and standardized seamless operations can help the customers in implementing proven technologies and processes quickly across a broad footprint.
The transition can help the plan administrators achieve:
1.overall cost savings related to contributions processing
2.increase in people productivity
3.improvement in service levels
BPaaS solution can help the plan administrator organizations in converting capital expenses to operating expenses through a new pricing model that includes one-time onboarding fee and ongoing billing based on per-file transaction, per payroll schedule model.