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The Value of Having an Implementation Partner for Canadian Pension Plans

By Kevin Lynch, VP of Business Development, Canada, Linea Solutions and Vincent Houle, Senior Consultant, Linea Solutions

In the process of implementing systems that provide pension benefits, we’ve learned that the staff of these organizations are often overwhelmed by the thought of going through an implementation of this size and complexity. For most, this will likely be the only time in their career that they undertake this type of endeavor. Often these staff need help with organizational assessments, analyzed processes, defined requirements, procurements, performed change management, and Pension Administration System (PAS) implementations. We believe that the ultimate goal of modernizing a pension system is to better serve membership by helping staff be more effective, increase the role for external stakeholders, and improve the efficiency of the plan. 

Because pension modernization initiatives are very complex, and often are business transformation projects, we see many US pension plans use the services of an implementation partner to guide them through strategic initiatives. Typically, these implementations are a significant investment financially and operationally. They involve converting all the work histories of members – including detailed compensation, employment history, contributions, service breaks, plan history, buybacks, and their complex rules – in order to calculate pension entitlements. Additionally, we’ve seen a rise in ancillary capabilities being integrated with the core PAS including: Member/Employer portals, workflows/CRM functionality, and Document management. Failure in any of these areas can lead to a reduced service level for members and employers.

Below are four examples detailing how an implementation partner can add value with examples from past projects we’ve worked on.

Future State Design

The engagement of an implementation partner in all facets of modernization is common for US plans. For the purposes of this discussion, we define modernization as any initiative to improve systems and/or processes. An implementation partner using its experience can help with future state design as well as analysis of the current system based on their understanding and knowledge of many funds’ practices and systems. Thoughtful analysis and deliberation on the desired future state is essential to maximizing the benefits that can be achieved from the evolving offerings of PAS vendors. Additionally, it’s very important to avoid simply repeating the same processes that have existed for years. 

Our experience is that funds who implement systems, do not properly plan for their future state and are unable to immediately reap the benefits. In one case, a fund had a business process that required employers to submit paper forms with data that was then manually entered by retirement system staff into their PAS. Those data elements were then used by the PAS to perform critical processes, such as issuing refunds and processing retirements. In addition to the employers submitting the data on paper forms, the data was also transmitted to the PAS through the automated employer reporting process. This process routinely resulted in discrepancies caused by the employer providing different information on the paper form than reported through the automated transmittal process, or by the retirement system staff incorrectly entering the information into the PAS manually. 

The solution identified was to eliminate the submission of paper forms by the employer and to only utilize the data submitted through the transmittal process. Implementation of this solution required significant coordination among multiple stakeholders:

  • Researching statutes and retirement system rules to determine feasibility for eliminating paper forms
  • Creating a communication/education/transition plan for 400+ reporting employers
  • Updating user roles to eliminate the ability to enter/change employer-reported data
  • Revising workflows to reflect process changes

Ultimately, the fund was able to transition from using paper forms to working digitally but having a future state in place before would have saved them a lot of time and effort.

Optimize Staff Efficiency

One of the biggest challenges of staffing PAS implementation projects is hiring to augment staff for the two-to-five-year implementation period. Hiring temporary skilled staff is difficult, especially in today’s economy. By hiring an implementation partner, an organization can benefit from having specialized, qualified, and knowledgeable resources available for projects. While some organizations may engage their own project manager and have the best intentions to either augment or segregate portions of staff to support a pension implementation, this could lead to staff becoming overwhelmed and either lose efficiency or start to cut corners due to the complexity of the project. 

As most staff members have not experienced a PAS implementation, they might be uncomfortable in writing requirements, knowing how to test or writing a test plan, being system experts, and understanding the impacts of their decisions. An implementation partner has consultants that have gone through multiple implementations with experience in each of the aforementioned areas. To complete the scope of work in these projects, it is important to consider an implementation partner who can frequently assist clients directly with additional consultants and train clients’ staff on key areas like design confirmation and testing. 

For instance, we have seen funds bring in a training expert for a project and the organization realized early on that they did not have the expertise needed. So that expert – who now possessed a deeper knowledge of the pension fund – was able to create an organizational training plan to better assist them. They even ended up building a training department for the organization after putting their plan together, which helped develop the skills of their existing staff.

Market Knowledge

Every vendor has strengths and weaknesses, and an implementation partner with experience working with a wide swath of vendors can help pension plans focus their time in finding the ideal vendor for their specific situation. Vendor management is also a key component in managing costs and decision making; an implementation partner has the capability to tailor their approach to maximize the efficiency and quality in working with any given vendor. Finally, having a 3rd party point-of-view can help balance the discussion and ensure a productive working relationship. It is important to not only vet the solution but ensure the resources a vendor proposes have the appropriate expertise and are a cultural fit.

For instance, when pension funds do not have test plans created for them (and they frequently do not), the vendor will supply the organization with “fake” data to run their test cases with. This method is insufficient when trying to test successfully to get to Go Live because it often relies on clean data sets that do not account for uncommon situations. A more productive method is to use a comprehensive “real” data set from the production environment. This method can help funds to better work with rare cases that are not presented in a vendor data set, but it is not always an option that is considered.

Industry Best Practices 

By leveraging the implementation partner’s experience to understand what is standard in the industry as well as new trends, an organization can expand its circle of options. This spans across the entire spectrum of pension administration from cybersecurity, pension payroll, integrations, administration best practices, communication best practices, project management methodology, data conversion strategies, infrastructure setup, etc. For example, some systems tend to look for an all-encompassing solution, while others want best of breed with multiple components. 

One fund that we have worked with wanted to jettison a young system that was not even 10-year’s old for a completely new one. A deeper analysis revealed a functionally robust solution that was significantly enhanced and residing on a slightly-dated technology platform. We worked with the fund to understand and define technical options available with the current implementation vendor, as well as identify and acknowledge other benefit industry solutions that could meet their needs. As part of the alternatives analysis, three different COTS benefit solutions were reviewed and compared to current system functionality available from the incumbent vendor. After a thorough cost/benefit analysis and total cost of ownership determination, the fund concluded that they should stay with their current system and vendor. 

It is evident that pension plan administration is complex on its own, without trying to implement new systems and processes. Having an implementation partner in place for that journey can help mitigate costs, minimize risk, and create more efficiency.

Kevin Lynch, VP of Business Development, Canada; Linea Solutions

Kevin Lynch has been involved in solutioning for the Pension administration business for over 20 years across a variety of roles and organizations in North America. He has pension administration operations, implementation, and business development experience. He has worked on both public and private sector pension plans in Canada and the United States. He has worked for multiple pension administration providers in both a third-party administration capacity and at a software vendor. Kevin has led an entire Pension Administration practice at a global consulting firm responsible for over 200 colleagues worldwide and over 100 clients. His expertise lies across pension administration best practices, process improvements, and customer satisfaction initiatives. 

Vincent Houle, Senior Consultant, Linea Solutions

Vincent Houle has over 15 years’ experience in the Pension Administration industry. Since he joined Linea in 2016, Vincent has acted as both business analyst and project manager for a variety of pension projects across Canada and the United States. Vincent has also performed multiple strategic assessments with some of the largest pension plans in Canada to help them improve their business processes or define a desired future state in line with industry best-practices. Additionally, he has spent significant time working on special projects, business process improvement opportunities, and managing software implementations.