Selecting an insurer for pension risk transfer is a big decision, and a big commitment. Among other factors that motivate plan sponsors to unload the risk of a pension plan are rising Pension Benefit Guaranty Corporation (PBGC) premiums. The insurer’s financials are just a starting point. Plan sponsors need to assess how its retirees are going to be treated, educated and communicated with for years to come.
Plan sponsors get an overview of these critera in “The Three Pillars of Exceptional Service Delivery,” a series of white papers from Prudential, that contends that the service in providing pension risk transfer has evolved. From a focus on the standard operational practices— data processing, retiree on-boarding, payment processing, record maintenance—providers now emphasize consultative practices: the insurers’ capabilities and communications with retirees before, during and after the plan transition.
“Insurers are not only assuming commitments to deliver a dependable stream of income to retirees, they are also promising to offer administrative services beyond issuing monthly payments,” explains Dave Casto, head of Pension Risk Transfer Service Delivery at Prudential Retirement. “Companies have recognized that their reputations are on the line if the selected insurer isn't committed to providing retiree services at least as good or better than the retirees enjoyed with the plan sponsor.”
The three papers focus on a different aspect of service delivery: retiree communication and education, transaction and transition, and consultation and commitment. “Exceptional service delivery” is defined as an insurance company’s ability in four areas.NEXT: Addressing the needs of plan sponsors and their retirees
Service delivery capabilities include the insurer’s ability to create a far-ranging plan that addresses all the plan sponsor’s and their retirees’ needs. Systems capacity is the ability to effectively onboard large populations of retirees and beneficiaries without payment interruption or data being compromised. Human resources proficiency is key, and an effective provider has a transition team in place to guide retirees through every phase of the transaction, as well as an experienced and dedicated customer service team to service retirees during the transition and beyond.
A good provider is committed to the customer experience, and is able to offer a variety of on-going communication and education touchpoints, so retirees can access information when they want to, and the way they want to.
Continuous evaluation and improvement of service delivery capabilities are critical, Prudential says, as well as their impact on the satisfaction of plan sponsors and retirees. Each year, people place more importance on good customer service. For example, in 2013 when asked about the helpfulness of the transition information Prudential provided, 73% said it was very helpful, while 94% indicated the same in 2014. When asked about welcome kits they received from Prudential, 79% of annuitants said they were helpful in 2013, while just a year later that figure increased to 88%.
“Once signed, group annuity contracts are irreversible,” Casto says. “This white paper series calls attention to the importance of insurer selection beyond financial measures and offers criteria for identifying exceptional service delivery capabilities and evaluating their effectiveness over time.”