Andrew Phillips
Modernization has been a buzzword for pension plans across North America for some time now, but what does it really mean?
At its core, modernization means the process of adapting something to modern needs. For retirement systems, that definition rings true, with the challenge of sourcing, adapting to, and implementing new systems and services being exactly where many pension plans find themselves today.
But with any challenge comes opportunity. As plans work to enhance services, streamline administration and improve the member experience, technology offers fresh momentum and a clearer path forward.
Technology alone doesn’t eliminate these hurdles, but progress is within reach with the right approach, helping pension plans to boost performance and build future-ready operations.
Modernization doesn’t necessarily mean tearing everything up and starting from scratch either. It means building on what works, addressing what doesn’t and embracing the technology trends that are reshaping modern pension plan operations.
Shifting pension plan member expectations
From banking and retail to healthcare and insurance, industries have undergone a rapid shift in how they serve customers. Always-on access, intuitive interfaces and personalized experiences have become the norm. And as consumers, we bring those same expectations with us when we interact with public services.
Members increasingly expect the same digital experience from their pension plans as they do from their bank: simple account access, clear communication and the ability to do what they need or retrieve the information they need, quickly. At the same time, plans are under regulatory pressure to deliver better data quality, improve security and prove operational resilience.
How to enable purposeful pension plan modernization
Pension plans don’t need to do it all at once. The tools of today are designed to be more flexible, cost-effective and incremental than the multi-year overhauls and implementations, which are gradually being consigned to the past.
Cloud platforms offer scalability and security without the burden of physical infrastructure. Modular systems allow plans to upgrade or replace specific components without disrupting everything else. Low-code tools enable faster delivery of new features with less reliance on specialist development teams. Automation and dare we say it, AI, are allowing for easier, faster processing, improving accuracy whilst reducing manual workloads.
Together, these are the building blocks of a modern member-focused and future-ready retirement system.
Lessons from the field
Across North America, forward-thinking public pension plans are already embracing modern technologies and benefiting from the results.
Some systems have introduced digital portals with strong member uptake, processing hundreds of thousands of benefit estimates and refund requests online in a matter of months. Others have shifted key interactions to digital channels, with the vast majority of opt-outs now handled electronically, millions of member communications delivered through digital platforms, and a growing proportion of calls resolved via automated systems.
The purpose behind the tech
There is a risk in modernizing for modernization’s sake. Plans must be clear of their purpose and goals and ensure that they align modernization initiatives with strategic outcomes.
Reducing technical debt and risk, improving member experiences, creating operational efficiencies and enhancing data accuracy and governance are just some of the core areas plans could benefit in.
It also means understanding the unique needs of the pension environment: long-term member relationships, complex rulesets and strict compliance requirements. Modernization must respect this complexity while still driving simplicity.
Modernization gets talked about a lot in today’s pension landscape, and for good reason. Done right, it’s more than a buzzword. Pension plan modernization is a strategic lever for delivering better outcomes, stronger systems and a better experience for every member.
