Keeping Pension Payroll Simple, Economical and Compliant: Executive Brief
Processing pension payroll accurately and on time is a priority for organizations… despite being an admittedly administrative task that can sideline strategic resources while adding no strategic benefit to the organization.
As baby boomers retire in ever-greater numbers, pension payroll demands will continue to increase — especially over the next two decades, during which the number of pensioners will increase 3.4% each year. As a result, forward-thinking Canadian companies are searching for viable ways to:
- Minimize the cost and time burdens of managing pension payroll especially as the number of retirees continues to swell
- Stay compliant as payroll legislation evolves
- Ensure quality of service and payroll accuracy for pensioners
This brief explores the option of delegating pension payroll administration and processing to a third party — even while core payroll remains in-house — and examines the impact of this option for both the organization and the pensioner.
Minimizing The Cost And Time Burdens Of Managing Pension Payroll
An analysis of how much time a payroll team spends on pension payroll — from administering, processing, reporting and managing inquiries — typically reveals there is a clear cost savings to be gained through outsourcing.
The savings increase when organizations factor in the IT time and expenses associated with maintaining technology in-house, adapting applications to support pension payroll needs and evolving legislative requirements.
The benefits of outsourcing should continue to increase with time as more employees retire and enable organizations to rely on a predictable, fixed cost per pensioner.
Staying compliant with evolving legislation is always a payroll priority. Not only does outsourcing relieve the worry and legwork of staying current with regulations, it eliminates the burden of applying updates to existing processes and the legal risks associated with unintentional non-compliance.
Outsourcing delivers other legal advantages since companies are required to maintain a distinct separation between core payroll and pension payroll. Many businesses choose the outsourcing route solely to maintain clean financials for simplified auditing and reporting purposes.
Ensuring Quality Of Service
Whether in-house or outsourced, providing reliable service to pensioners is a top priority for organizations committed to best practices.
Today's increasingly tech-savvy retirees are demanding new ways to receive information – and more of it, including electronic pay stubs, information-rich and timely publications, and regular customer communications. Third-party providers often offer a greater selection of customer service options for pensioners, including:
- Dedicated, bilingual, toll-free customer service that goes beyond regular business hours as well as web-based assistance options
- Paper cheques or Direct Deposit
- Rapid resolution of pensioner inquiries by qualified professionals
- Self-service functionality so pensioners can easily update their own personal information for greater accuracy
- Frequent, ongoing communication with pensioners, alerting them to the most current, relevant information
Making A Smooth Transition
From guaranteed compliance and the freeing up of strategic resources – to the opportunity to provide additional options to a diverse and growing group of pensioners – many organizations are recognizing the benefits of outsourcing pension payroll. In fact, the percentage of companies willing to outsource pension payroll outnumbers those prepared to outsource core payroll by almost five times.*
When analyzing prospective pension payroll partners, the following checklist offers a starting point of fundamentals to keep in mind:
A pension payroll partner should provide:
- Flexible customer service to respond to the diverse demands of pensioners, including web, self-service and a dedicated toll-free bilingual support line
- Cost-effective services that are easily scalable to any number of pensioners, from fewer than 500 into the tens of thousands
- Dedicated pension payroll services with personnel and Canadian-hosted technology that cater to the specific demands of pension payroll including rollovers and lump sum payouts
- Provides mandatory management and key performance reports that facilitate trend identification and monitor the effectiveness of the solution
- Management of year-end tax reporting services including production and development of tax forms as well as balancing and reconciliation
- Canadian support from seasoned experts in pension payroll and legislation
- Cheques or direct deposits with statements
- Event communications from the plan sponsor to pensioners
- A proven track record for consistently accurate, on-time payroll
- A seamless transition for pensioners when converting from an in-house to an outsourced solution
*37% of companies surveyed in Ceridian confidential research were willing to outsource pension payroll compared to 8% willing to outsource core payroll.
ABOUT CERIDIAN CANADA
Ceridian Canada is a human resources solutions provider. Ceridian's solutions include payroll, Dayforce Human Capital Management, HR information services, recruitment and staffing services, Employee Assistance Programs, training and more.