Where Does HRMS Fit in a Shifting Retirement Benefits Culture?
Retirement in the workplace is fast becoming a fluid and complex concept. Gone are the days when everybody retired at the same age; thanks to a combination of increasing health – i.e. people are fit for work for longer – and unfit-for-purpose pension funds, legislation and business practices are pushing the retirement age further and further.
Add to this complexity, the much-discussed ‘aging workforce’, top-heavy with Baby Boomers underpinned by another three generations and the subject of pensions and retirement benefits administration can bring even the hardiest HR manager out in a cold sweat.
HRMS Can Shoulder the Burden
For a start, there is the global pensions shift from defined benefits plans to defined contribution plans. The difference being in the former, the pay-out (on retirement) is guaranteed, whereas in the latter, the only commitment is to the payments, the results depend on the success of investments throughout the life of the plan.
This tends to require a degree of close attention and strategizing coupled with accurate recordkeeping and compliance with the latest legislation. Certainly on those last two points, a good HRMS benefits administration module can help shoulder the burden.
A Shifting Pensions Culture
Part of the shifting pensions culture involves putting more responsibility on employees. This can be a problem for two reasons: one, they generally don’t have the expert knowledge needed to make the best choices for their circumstances (which, of course, change throughout their working lives), and two, it’s human nature to feel immortal when we’re young and so increasingly employees are not contributing sufficient amounts early enough in their careers, leading to a probable shortfall in retirement.
it’s human nature to feel immortal when we’re young and so increasingly employees are not contributing sufficient amounts early enough in their careers, leading to a probable shortfall in retirement
The key employer tactic here is communication and, as with benefits enrollment exercises, a sophisticated HRMS can assist with a wider variety of communication options, shoring up the face-to-face presentations and emails with easy-access channels, including podcasts, slideshows, comparison tables, FAQs, employee forums, and online chatrooms.
All of this begs the question of internal expertise within an organization – put simply, do you have the in-house knowledge to ensure that employees are advised appropriately? This takes on a compliance flavor in the US with the Employee Retirement Income Security Act (or ERISA) requiring those responsible for pensions – including employers who are sponsoring 401(k) plans – to act as a ‘prudent expert’.
The message of this legislation is “unless you have the in-house expertise, you should outsource your pensions management to a third party service provider”. It’s unlikely that your HRMS can act as that prudent expert, however, if you are keeping things internal, good HRMS retirement benefits and pensions reporting functionality can certainly assist your ‘prudent expert’ in their role.
Featured white papers
HRMS Software Pricing Guide
Get your comprehensive guide to the cost of HRMS software.Download
HRMS Software Vendor Directory
Put the most up-to-date HRMS vendor directory on your desk today! Over 60 vendors listed.Download
HRMS Selection Survival Guide
Select the right HRMS for your company with this easy-to-follow guideDownload