Client Stories | February 1, 2019
Your people will depend on their defined pension plans for decades of retirement living. Make sure you know how to build and maintain ones that last.
Journey consulting works by taking a long-term, holistic look at your DB plan and helping you with the following:
• Data maintenance: You can’t make good decisions about your DB plan based on inaccurate, out-of-date data.
• Plan design: We make sure the benefits still make sense for your current population.
• Asset strategies: You’ll never have to worry if your fund’s investments match today’s market.
• Partial risk transfer: We’ll help reduce costs and risks associated with vested terminated participants.
• Plan termination: When it’s time to move participants onto annuities, we’ll help you figure the best way to do so.
One way our journey consulting has helped in the past is with a client wanting to tweak its pension formula.
Growing pension plan costs necessitated a change, but one company was not interested in taking the significant step of freezing or closing its plan. Instead, company leaders wanted to curb costs by changing the plan’s benefit formula while making sure not to undermine their mission to serve their employees with valued benefits. Unfortunately, data issues within the plan threatened to offset impending savings.
While projections showed the change in formula would provide the necessary cost savings going forward, implementation unearthed some data-related issues that would need to be resolved as the plan redesign progressed:
With data cleanup as our priority, our pension data experts outlined an agreed-upon plan. Our team worked on-site to gather copies of all records and cross-check each employee’s history. The data cleanup and new calculations were segmented into pre and post plan-design changes. The team set up tools to recognize legacy plan accruals and simplify post plan-design calculations. This meant HR staff could easily update information and produce accurate benefit calculations in a more efficient manner.
The client felt assured that the change in pension formula would help control costs going forward and the data cleanup was essential in order to achieve those cost savings. Their initial concern was how long it would take to recoup the cost of the additional work and see cost savings. Our team analyzed the efficiencies generated from the use of the new tools and accurate data for calculations compared to the old approach, and determined the client would recoup the fees within 2-3 years, generating significant savings per year after that.
The ease and speed of administration going forward was very well received by both the pension staff performing the calculations and the employees requesting the calculations — calculations that once took one to two weeks now could be produced the same day.Contact Us
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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