Defined Contribution and Pension
Defined contribution plans are the cornerstone
of most current retirement benefit packages
and are critical part of employees' retirement
security. These plans are complex and
demand a high level of specialized knowledge,
legal expertise, and technical accuracy.
Employers face an evolving and increasingly
aggressive compliance environment. Legislatures
and regulators are challenging the transparency
and fairness of fees and the investment choices
provided to participants. Litigation involving
plan sponsors and their fiduciary obligations
to protect participants' interests has increased
dramatically. And, uncertainty over
the financial security of an aging workforce
is causing broad concern.
Pensions administration involves maintaining membership
records, and handling any requests from scheme members
and changes of member status within a scheme. It
also involves collecting contributions, paying benefits
and communicating pension information to members.
The majority of the work is conducted with the help
of software, which also needs maintenance and are
usually carried out by HR deparments.
As pensions get ever more complicated
and there are more pressures on costs, the
trend to outsource has hastened. Here are
the key reasons why business’s outsourcing
HR decide to outsource Defined contributions
- Price is being driven down by fierce
competition among third-party administrators
- Outsourcing removes the requirement to
invest in infrastructure and keep systems
up to date, releasing cash flow to employer
- An outsourcer takes on the burden of
risk in relation to compliance and service
standards and this is bound by contractual
- The administration operation has a supporting
infrastructure to ensure compliance through
processes, technology and expert knowledge.
Outsourcers have access to technical expertise
from professionals; Succession planning and
technical training are part of the approach;
Up-to-date systems technology has inbuilt
processes to capture and retain scheme knowledge.
A good outsourcer providing services for defined
contribution and pensions demonstrates:
- improvements, especially around member experience;
- Technology and regulation at the heart of its
- Processing platforms regularly updated
to cope with scheme changes and regulation.
The first step towards outsourcing requires
an assessment and understanding of the current
cost and time devoted to in-house administration.
Establishing some benchmarks in-house can prove
difficult as service levels are not typically
monitored as rigorously and the cost of infrastructure
can be hidden in the wider operation – but
it is a good start. Data integrity should also
be considered as this may impact the cost of
migration to a TPA, although all good administrators
will have the tools and approaches to cleanse
data as part of the client integration programme
and if there is a problem with data quality,
addressing this should be a priority.
The next step is to talk to TPAs. There is
currently an oversupply in the TPA marketplace
and this means providers will be consolidating
and may leave the market in the next few
years. A good outsourcer will work with you
to tailor a solution as individual as each
scheme. Some schemes choose a halfway house
to outsource a section of membership, or
certain bulk tasks. Systems can be hosted
by the outsourcer and access provided online.
Others look to outsource the entire operation.
Certainly all employers and trustees should at
least consider outsourcing. In the current economic
climate everyone is looking for ways to boost productivity,
work smarter, stick to their knitting – a
good administrator will let you do all of this
HR System Outsourcing
Ask yourself the following questions
- Are you over-reliant on a few, key staff
and their availability (IT, System Supervisors,
- Do you have a disparate HR function?
- Are you looking to optimise cost?
- How many HR projects are on the go or
in the pipeline?
Why outsource HR tasks? - There are many
reasons and no one solution fits all
Absence : a reduction in problem absence levels
through pushing absence information and ownership
to managers and employees
Management Information : better, more timely
and flexible decision-assistance through an interactive,
skilled and focused management information service
Cost Savings : reduction in need for HR administration
focus, as managers and employees own more information
administrative time is reduced. The leads to
a reduction in fixed overhead costs and headcount.
How HR system outsourcing can help?
- Adoption of data maintenance tasks
- Management Information generation and reporting
(including interactive sessions each month)
- scheduled tasks
HR Business Process Outsourcing
HR Business process outsourcing is basically
a combination of business process outsourcing and
human resources outsourcing. We are basically talking
about an action that will improve your company’s
overall service. If you choose to use it you will
gain from using both human resources services and
business process outsourcing services. The company
you run will immediately improve its efficiency and
cost transparency through a simple contract. Keep
in mind that now we are talking about buying a package
that includes both BPO and HR outsourcing and not
hiring two different companies to do it.
Although this is also an option, if you want to
outsource both a business process and HR we recommend
that you consider working with just one outsourcing
provider. This improves communication and reduces
the time needed to talk about anything that is linked
with projects involved.
HR business process outsourcing is basically
a process that will shift responsibilities of 3
or even more transactional processes. This includes
payroll, call centers and benefits administration.
In order for this to happen there is a need to
hire a single vendor with a good reputation. In
most situations HR specialists end up free and
can concentrate on various tasks involved with
executive coaching or succession planning. HR business
process outsourcing is nowadays considered by a
lot of companies and they are planning ahead from
this point of view. We expect that in the near
future most medium sized businesses in some industries
will use HR business process outsourcing services.
HR business process outsourcing brings in a lot
of advantages. The most important one stands in
letting you eliminate repetitive, important, transactional
and low valued HR parts so that you can easily
focus on essentials. At the same time the company
that uses HR BPO will gain immediate access to
technology that it can not really afford. You thus
gain cost transparency and an efficiency that you
simply can not afford in another way.
HR business process outsourcing companies will
offer you at least the same level of quality that
you are used to but at a lower price tag. This
basically means that we are saving time and improving
productivity. The immediate result is an increase
in profits. The only real problem that can appear
is hiring a provider that can not deliver. This
can offer money loss so we do recommend that you
keep a close watch for this fact. Learn what it
is needed to find the best provider and only after
that start your search