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Finding the right pension administrator is an important decision. Whether you're selecting your first third-party administrator or considering a change, the right partner can make a big difference in the long-term success of your pension plan.
At the same time, the search has become more challenging. As many providers have shifted their focus toward other retirement services, organizations may find it harder to identify partners with deep pension administration expertise.
This article highlights what to look for in a modern pension administration partner, compares modern and legacy administration models, and shares questions you can use in your next RFP.
Not every modern-looking platform delivers modern administration. Technology matters, but it's only part of the picture. The best pension administrators combine modern technology with strong processes and experienced pension professionals. When comparing providers, look beyond the software itself and consider how the entire service model works.
Though not an exhaustive list, the table below calls out common differences between modern and legacy systems to be aware of.
| Capability | Modern Systems | Typical Legacy Systems |
|---|---|---|
| System architecture | Unified administration platform with participant and sponsor workflows and reporting functions in one environment. | Often built from multiple integrated systems or modules that may require separate maintenance and updates. |
| Access to plan information | 24/7 access for sponsors and participants with self-service capabilities. | Access frequently routed through administrators, with limited self-service functionality. |
| Transparency | Sponsor visibility into participant interactions, call logs, and administration data. | Data often controlled primarily by the administrator, with less direct sponsor visibility. |
| Data availability | Real-time or near-real-time access to plan data and reporting for faster issue resolution and fewer sponsor requests. | Reporting may be periodic, batch-based, or dependent on administrator requests. |
| Customization and plan changes | Designed to support changes and plan-specific configurations within a single platform. | Modifications may require longer implementation timelines and additional vendor involvement. |
| Participant experience | Online dashboards, projections, payment initiation, and self-service tools to reduce participant frustration and call volume. | Participant functionality may be more limited and often dependent on call-center support. |
| Administrative efficiency | Emphasis on automation, streamlined workflows, and reduced manual intervention to lower error rates and improve consistency. | Greater reliance on manual processes and administrator-mediated workflows. |
| Data integrity and consolidation | Designed to centralize plan data and reduce fragmentation across systems, creating less reliance on manual reconciliation . | Data is frequently distributed across multiple legacy databases and applications. |
| Support model | Pension-focused support team and onshore pension expertise. | Support commonly delivered through broader service centers with varying levels of pension specialization. |
| Security and controls | Annual SOC 1 and SOC 2 audits and modern security controls. | Security posture varies widely depending on the age and modernization level of the platform. |
Modern technology can improve the experience for both participants and HR teams. But technology alone isn't enough. The best pension administration combines the right technology, well-designed processes, and experienced people working together.
Cost is important, but it shouldn't be the only factor in your decision. A good RFP also helps you evaluate the participant experience, technology, service model, and risk management practices so you can choose a partner that will support your plan for years to come.
The following questions are organized into the three categories of effective pension administration, discussed in our previous article, “What Should Outsourced Pension Administration Look Like?” These categories include Events, Processes, and Risk. Consider using these questions in any future RFP to vet potential partners against administrative best practices.
These questions help you understand how the provider supports participants during important moments and whether they deliver the level of service your employees expect.
How do you support participants through major life events such as retirement, termination, disability, or beneficiary changes?
What percentage of retirement applications are completed without requiring rework or correction?
What are your average response and resolution times for participant inquiries?
Can participants initiate retirement, beneficiary changes, and payment elections online?
How do you measure participant satisfaction?
How do you accommodate participants with unique or complex situations?
These questions ask whether the administrator’s technology simplifies administrative processes and adheres to best practices.
How do you ensure data accuracy and consistency across systems?
What percentage of administrative activity is automated versus manually processed?
How many systems are required to administer a typical pension plan?
Can sponsors view participant activity and service requests in real time?
What transactions remain inaccessible to plan sponsors?
How are plan amendments and special calculations managed?
What tasks still require spreadsheets, email workflows, or manual intervention?
Though all categories can impact risk, these questions prioritize the systems in place that provide proactive protections to manage it.
How do you support clients during audits, regulatory reviews, or investigations?
What cybersecurity, data protection, and business continuity measures do you maintain?
How do you help clients reduce long-term administrative and fiduciary risk?
How are administrative errors tracked, reported, and corrected?
What percentage of your pension administration staff has more than five years of pension experience, and how is that knowledge shared across the organization?
How do you prevent knowledge concentration among a small number of employees?
Have you experienced any material pension administration errors in the last three years?
Technology and expertise matter, but so does the relationship. The best pension administrators don't simply process transactions. They understand your organization's goals and work alongside HR, benefits, finance, and more.
When your administrator feels like an extension of your team, communication improves for you and participants, and issues are resolved more quickly.
Once you've identified the right pension administration partner, the next step is planning a smooth transition. Our complete guide to transitioning pension administrators walks through the key considerations, common challenges, and best practices to help you reduce risk throughout the process.
Or, if you’re ready to take a fresh look at your Defined Benefit Administration, click here to connect with our team and explore what a complete model could look like for your plan.