How integrated payrolls can slash admin time

If the administrator does not use technology that is integrated with the payroll system, then this introduces a requirement to manually reconcile the pension membership, the payment amounts and other key data items, such as personal details.

Critical time is lost in the process and there is increased risk of delays and errors, which could ultimately lead to pensioners being under or overpaid, not to mention the additional costs and damage this creates for members and the organisation.

Whether the functions are carried out within the same or separate organisations, developing the correct technology solution for pension payroll data and payment process enables significantly faster and more reliable processing between the scheme administration, pension payroll and HR departments.

The right structural design also provides the capability to develop tighter controls and integration with enterprise solutions and business services. This in turn enables secure and scalable pensioner self-service and straight-through processing tools for key tasks such as change of address and personal details.

Integration will become increasingly important as the trend for multiple buy-in contracts for defined benefit schemes creates more complex pension payment sources

The main benefits of integration?

To have one single record for the entire member journey – from joining the scheme through to death, and available to all administrators – is invaluable.

It would mean a complete audit trail of all changes and processes throughout the lifecycle and would lead to better management information being available in a faster and more consistent format.

Automation will mean less manual interference and will naturally lead to lower administration and payroll costs.

Mismatching of data in associated but non-integrated systems creates significant operational risks. Integrated administration and payroll can reduce this risk as data is from a single source and in a single format.

There is no data exchange development, no interface processing, no manual reconciliation exercises and, most importantly, no manual spreadsheets.

Member communication from a single data source also removes the possibility of differing or confusing messages being issued. You can go further by standardising both the style and format of communications to help improve engagement levels.

With an integrated solution, there will be no movement of data between supplier systems, so you will be able to seamlessly link it with your online benefit portals. In addition there will be no manual data input from forms being passed between teams; an area where human errors can easily be made.

The time delay of data updates between the pension scheme administration system and pension payroll systems would also be eradicated.

Data validation and cleansing exercises are also simplified, with no need to compare results between systems, and annual audit costs could potentially be reduced as auditors will only need to audit one system.

Inevitably there will be times when late changes to the payroll calculations will be required, so an automated system will help speed this up and, in addition, process-focused security ensures key data cannot be amended during payment processing.

Pay may be calculated directly from pension benefit sources rather than total pension, and trivial commutations can be paid as a part of the pensioner payroll, reducing the need for single payments to be raised.

Members approaching retirement who decide to take a scheme pension would automatically be added to the pension payroll and could be paid on or before the next payroll run.

Members can also be instantly suspended from payment by the first team to be notified of their death, reducing the number of returned payments or overpayments.

Combine these benefits and you should be left with a well-run payroll system with improved member experience, consistent communications and a single point of reference for member enquiries.

Sharon Mitchell is head of UK administration operations at JLT Employee Benefits