Using IT solutions to help shape the future of pension funds

In Germany, members of a professional association are not required to pay into the statutory pension fund. This includes, for example, chemists, doctors, lawyers and notaries. These professional groups are however obligated by law to be members of a professional pension fund. Members make regular contributions, which are used to provide old-age, invalidity and surviving dependants’ benefits, among other things. Along with that, there are also voluntary pension funds for employees in a variety of sectors. These employees have the opportunity to make provisions for their retirement at favourable terms and gain financial protection against the risk of disability or premature death.

Pension funds and the challenges that come with them

Pension funds face a number of challenges that need to be overcome. They vary based on factors such as the number of members, the age structure of their members and the existing processes already in place. In principle, however, they have to fulfil the regulatory requirements and calculate costs and revenue in order to be able to deliver the promised benefits to beneficiaries.

Member administration as well as the management of existing pension entitlements and benefit claims pose a particular challenge. Regardless of what type of pension fund you are talking about, there are a number of administrative tasks that are often time-consuming and involve a lot of manual steps. Member administration entails, for example, collecting and maintaining member data as well as managing entitlements and benefits. These processes are often carried out by hand and on paper instead of making use of the IT options available. Because many tasks are performed manually, there is a higher risk of mistakes, which have to be corrected by hand. This places great demand on resources and leads to high administrative costs, which is clearly not in the interests of the fund’s members or beneficiaries.

Digital transformation adds value for pension funds

The digitalisation of pension funds is an effective way to successfully meet the challenges and work more efficiently.

There are a large number of IT solutions available that deliver considerable added value for pension funds in that they:

• Optimise processes: Targeted process optimisation makes it possible to automate tasks and processes.
• Reduce the number of manual tasks: Automating tasks reduces the amount of manual work and lowers the risk of errors.
• Improve resource planning: Digital tools allow resources (such as employees) to be more effectively planned and deployed.
• Reduce throughput and response times: Digital solutions enable faster handling of requests, applications and other processes.
• Lower the share of administrative expenses as a proportion of total costs: It is possible to reduce administrative costs by increasing efficiency and automation.
• Reduce the workload of employees: By automating recurring tasks, you can reduce the workload of employees and allow them to focus on higher-value activities.
• Increase efficiency: Digitalisation leads to an increase in the overall efficiency of the pension fund.
• Improve communication with members: Digital tools enable more effective and transparent communication with members.
• Help meet member expectations: Using digital solutions allows pension funds to better meet the expectations of their members.
• Increase member satisfaction and loyalty: Improvements in service quality and seamless processes lead to higher member satisfaction and loyalty.
• Help achieve compliance with data protection laws: The responsible use of IT solutions makes it easier to comply with data protection regulations and guidelines.
• Reduce the fund’s ecological footprint: Digitalisation reduces paper consumption and thus promotes a more sustainable way of working.

Digital transformation options available to pension funds

Progress can be made in the process of digitalising pension funds by implementing IT solutions to increase efficiency and improve service quality. Modern IT systems focus on expandable interfaces to enable closer links with the business community. To this end, existing systems are upgraded and service-oriented architectures with accessible interfaces are implemented. Digital services such as online data collection improve the customer experience, speed up processes and increase data quality for the pension fund.

The IT systems that are available and suitable for the purpose, which consist of the technical infrastructure, IT solutions for special applications and software designed specifically for pension funds, offer a wide range of possibilities. The aim here is to find the right technological solutions that are adapted to meet the individual challenges and requirements of the fund in order to get most out of them. There are a number of factors that go into the decision. While there are many options to choose from, it is important to consider individual aspects when making your decision.

For one, it is critical that the IT systems are user-friendly, since they should be intuitive and easy to use. The cost of the systems should also not exceed the allotted budget and they should offer excellent value for the money. Selecting the right IT systems for pension funds is a complex undertaking that must take each of the following into account: the requirements, scalability, security, ease of integration, user-friendliness and costs. Taking these aspects into consideration has a significant influence on the overall success and efficiency of the pension fund. How each aspect is weighted and prioritised may vary depending on the specific requirements and objectives.

Master data, such as the member’s name, address and membership number, can be entered in the partner system and managed there in a user-friendly way. This converts the data into a format that is compatible with other systems and then makes it available to them for further processing via interfaces.

A database system enables users to collect, store and manage information on policies, benefits, contributions and other relevant details about members. It helps pension funds to roll out more efficient administrative processes and get a full overview of their members and the individual details of their policies. In combination with other linked IT systems, the database system also allows data to be exchanged and transferred between the pension funds and external partners such as public authorities or other institutions.

A member portal that gives members easy access to relevant information and functions is one way that a pension fund can offer their members a digital, user-friendly service. It enables members to view and update their personal data, call up policy details, view benefits overviews and use various online functions. In addition, the member portal serves as a communication platform on which information and documents can be made available. The member portal improves communication between members and the pension fund. In addition, processes such as address changes can be processed automatically, leading to greater efficiency in administrative tasks and a better customer experience.

From vision to reality: implementation of IT solutions for pension funds

Pension funds can successfully overcome the challenges when it comes to implementing IT systems and solutions. However, because of limited resources and due to a lack of technical and IT expertise, this can prove to be a difficult undertaking for the pension fund, especially if this is done during ongoing operations. Work with adesso to meet these challenges. Our team of experts includes certified and experienced employees who have extensive technological expertise as well as in-depth technical and business know-how. We work with you to define your IT strategy, develop customised IT solutions to meet the specific requirements of your pension fund and successfully implement them. As a result, the pension fund is able to more effectively organise its internal workflows, reduce burdensome costs and the number of manual tasks and increase efficiency. In addition, the deployed IT solutions help increase member satisfaction and loyalty.

Would you like to find out more about exciting topics from the world of adesso? Then take a look at our previous blog posts.