CEM Pension Administration Benchmarking Analysis Investment ... CEM Pension... · NYC TRS Pensioenfonds van de Metalektro ATP NYSLRS PFZW Ohio PERS Rabobank Pensioenfonds Middle East*

© 2017 CEM Benchmarking Inc.

Investment Benchmarking Service

A benchmarking solution for your DB plan

CEM Pension Administration Benchmarking Analysis

Iowa Public Employees’ Retirement System

March 24, 2017

Paul Martiniello

[email protected]

+1 (416) 644-8091

mailto:[email protected]

© 2017 CEM Benchmarking Inc. © 2017 CEM Benchmarking Inc.

How you can use CEM’s pension administration benchmarking service:

• Measure and manage costs. Understand the factors influencing cost with a detailed peer analysis of your: - Staff costs - Transaction volumes - Productivity

• Measure and manage service. An analysis of over 120 key performance metrics that compares: - Your service levels relative to your peers - Service areas to improve or reduce

• Gain insights into current research on pension administration best practices and trends through CEM's Insights.

• Network with your peers at CEM's annual Global Pension Administration Conference to share best practices in pension administration.

• Access to CEM's online peer network for research and current issues in pension administration.

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CEM’s universe of participants

Participants

United States PSRS PEERS of Missouri Canada Australia*

Arizona SRS South Carolina RS APS BUSS(Q)

CalPERS South Dakota RS BC Pension Corporation CBUS

CalSTRS STRS Ohio Canada Post First State Super

Colorado PERA TRS Illinois Defence Canada HESTA

Delaware PERS TRS Louisiana FPSPP QSuper

Florida RS TRS of Texas HOOPP REST

Idaho PERS Utah RS LAPP SunSuper

Illinois MRF Virginia RS Nova Scotia Pension Corp. VicSuper

Indiana PRS Washington State DRS OMERS

Iowa PERS Wisconsin DETF Ontario Pension Board United Kingdom*

KPERS Ontario Teachers Armed Forces Pension Schemes

LACERA The Netherlands OPTrust Principal Civil Service Pension Scheme

Maryland SRPS ABP RCMP Scottish Public Pension Agency

Michigan ORS bpfBOUW Teachers' Pensions Scheme

North Carolina RS Pensioenfonds Metaal en Techniek Denmark Universities Superannuation Scheme

NYC TRS Pensioenfonds van de Metalektro ATP

NYSLRS PFZW

Ohio PERS Rabobank Pensioenfonds Middle East*

Oregon PERS St. Algemeen Pensioenfonds KLM CSEPF of Oman

Pennsylvania PSERS Saudi PPA

* Systems in Australia, UK and the Middle East complete different benchmarking surveys and hence your analysis does not include their results.

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The custom peer group for Iowa PERS consists of the following 12 peers:

Custom Peer Group for Iowa PERS

Peers (sorted by size)

Membership (in 000's)

Active Members Annuitants Total

Washington State DRS 310 172 481

Wisconsin DETF 256 192 448

Indiana PRS 247 153 400

STRS Ohio 212 159 371

Colorado PERA 238 110 348

Arizona SRS 204 140 344

Oregon PERS 168 139 307

Illinois MRF 174 116 291

Iowa PERS 168 114 283

PSRS PEERS of Missouri 126 86 212

NYC TRS 124 88 212

TRS Louisiana 89 77 166

Peer Median 189 128 325

Peer Average 193 129 322

Inactive members are not considered when selecting peers because they are excluded when determining cost per member. They are excluded because they are less costly to administer than either active members or annuitants.

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Your total pension administration cost was $53 per active member and annuitant. This was $49 below the peer average of $102 (and $33 below the peer median of $85).

$ per Active Member and Annuitant $000s

Category You Peer Avg Peer Med You

Member Transactions 6 13 12 1,564

Member Communication 8 16 16 2,323

Collections and Data Maintenance 5 7 5 1,383

Governance and Financial Control 3 8 7 897

Major Projects 14 13 6 4,095

Information Technology 11 22 18 3,132

Support Services and Other 5 24 17 1,546

Total Pension Administration 53 102 85 14,939

Your cost per member was lower in most categories.

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Pension Administration Cost Per Active Member and Annuitant

You Peer All Peer Avg All Avg

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Reasons why your total cost was $49 below the peer average.

Reason Impact

1. Economies of scale disadvantage $0.51

2. Lower transactions per member (workloads) -$5.53

3. Higher transactions per FTE (productivity) -$21.92

4. Higher costs per FTE for: salaries and benefits, building and utilities, HR and IT desktop $7.67

5. Lower third-party and other costs in front-office activities -$1.80

6. Paying more/-less for back-office activities:

- Governance and Financial Control -$5.83

- Major Projects -$2.57

- IT Strategy, Database, Applications (excl. major projects) -$7.21

- Actuarial, Legal, Audit, Other Support Services -$12.15

Total -$48.82

The following pages detail the key reasons why your total cost are different from your peers.

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You had lower transaction volumes per member (workloads).

Where did you do more/fewer transactions?

Volume per 1,000 Active Members and Annuitants $ per

Member Transaction

Impact

Front Office Transactions (or Transaction Driver)

Peer

Average More/ -Less You

1. Member Transactions

a. Pension Payments (Annuitants) 405 405 0% $0.00

b. New Payee Inceptions 23 26 -10% -$0.22

c. Withdrawals and Transfers-out 34 28 21% $0.47

d. Purchases and Transfers-in 4 10 -66% -$1.30

e. Disability Applications 0.8 2.1 -61% -$0.83

2. Member Communication

a. Calls and Emails 380 651 -42% -$1.78

b. Incoming Mail 205 483 -58% -$1.38

c. Members Counseled 1-on-1 29 28 6% $0.10

d. Member Presentations 0.3 1.6 -83% -$1.04

a. Written Estimates 51 37 39% $0.51

3. Collections and Data Maintenance b. Data and Money from Employers (Active Members) 595 595 0% $0.00 b. Service to Employers (Active Members) 595 595 0% $0.00 c. Data Not from Employers (Actives, Inactives,

Annuitants)

1,236 1,350 -8% -$0.06

Weighted Total 31,295 39,200 -20% -$5.53

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You had higher transactions per FTE (total productivity).

• Your transactions per front-office FTE were 96% above the peer average, the highest in your peer group.

• Your higher transaction volumes per FTE decreased your

total cost per member by $21.92 relative to the peer average.

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Weighted Transactions per Front-Office FTE

You Peer Peer Wtd-Avg

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You had overall higher costs per FTE.

Your higher costs per FTE increased your total cost by $7.67 per member relative to the peer average.

You Peer Avg

Salaries and Benefits $101,320 $88,477 $84,748

Benefits for Retired Staff $359 $923 $821

Building and Utilities $7,619 $9,639 $10,566

Human Resources $1,518 $3,147 $2,894

IT Desktop, Networks, Telecom $10,949 $13,002 $11,216

Total $121,766 $115,188 $110,245

Cost per FTE

FTE-Wtd Peer

Avg

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You paid less for back-office activities.

Your adjusted cost per active member and annuitant of $30.92 for back-office activities was below the peer average of $58.67.

This decreased your total cost per member by $27.75 relative to the peer average.

More/

Back Office Activities You -less

Governance and Financial Control $3.46 $9.29 -$5.83

Major Projects $14.48 $17.05 -$2.57

IT Strategy, Database, Applications

(excl. major projects) $9.47 $16.68 -$7.21

Actuarial, Legal, Audit, Other $3.51 $15.66 -$12.15

Total $30.92 $58.67 -$27.75

Back-Office Activities - Adjusted Cost per Member

Peer

Avg

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2013 2014 2015 2016

You $45 $54 $45 $53

Peer Avg $94 $98 $103 $103

Trend in Total Pension Administration Costs

Cost Trends

Trend analysis is based on systems that have provided 4 consecutive years of data (11 of your 12 peers).

Your total pension administration cost per active member and annuitant increased by 5.7% per annum between 2013 and 2016. During this same period, the average cost of your peers with 4 years of consecutive data increased by 3.2% per annum. The cost increases during 2014 and 2016 were directly the result of your increased major projects cost, specifically, your investment in I‐Que. You continue to have the lowest administration costs in your peer group.

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Your total service score was 81, in a high-scoring peer group. This was below the peer median of 85.

Service Scores by Activity

Activity Weight You Peer Median

1. Member Transactions

a. Pension Payments 19.7% 100 100 b. Pension Inceptions 7.4% 88 88 c. Refunds, Withdrawals and Transfers-out 1.3% 100 87 d. Purchases and Transfers-in 3.1% 92 81 e. Disability 3.8% 90 90

2. Member Communication a. Call Center 21.2% 74 76 c. 1-on-1 Counseling 7.4% 97 83 d. Presentations and Group Counseling 6.5% 65 91 e. Written Pension Estimates 4.7% 93 90 f. Mass Communication

• Website 11.3% 71 86 • News and targeted communication 2.8% 60 82 • Member statements 4.7% 92 89

3. Other Satisfaction Surveying 5.0% 25 54 Disaster Recovery 1.0% 66 93

Weighted Total Service Score 100.0% 81 85 Service is defined from a member’s perspective. Higher service means more channels, faster turnaround times, more availability, more choice, better content and higher quality.

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Examples of key service measures included in your Service Score:

Select Key Service Metrics You Peer Avg

Member Contacts • % of calls resulting in undesired outcomes (busy signals, messages, hang-ups) 6% 9% • Average total wait time including time negotiating auto attendants, etc. 59 secs 123 secs

Website • Can members access their own data in a secure environment? Yes 83% Yes • Do you have an online calculator linked to member data? Yes 92% Yes • # of other website tools offered such as changing address information, registering for

counseling sessions and/or workshops, viewing or printing tax receipts, etc. 10 13

1-on-1 Counseling and Member Presentations • % of your active membership that attended a 1-on-1 counseling session 4.9% 4.7% • % of your active membership that attended a presentation 1.9% 5.4%

Pension Inceptions • What % of annuity pension inceptions are paid without an interruption of cash flow greater

than 1 month between the final pay check and the first pension check? 100.0% 90.9%

Member Statements

• How current is an active member's data in the statements that the member receives? 2.5 mos 2.2 mos • Do statements provide an estimate of the future pension entitlement? Yes 75% Yes

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Your service score increased from 80 to 81 between 2013 and 2016.

Trend analysis is based on systems that have provided 4 consecutive years of data (11 of your 12 peers).

Group Counseling: Attendees as a percent of active members increased from 1.5 to 1.9. and your average number of attendees per presentation decreased from 60 to 50. Call Centre: Your undesired outcomes as a percentage of total incoming calls decreased from 7% to 5.6% and you now provide cost to purchase service credit on an immediate real-time basis to members over the phone. Purchases and Transfers-in: Your turnaround time to provide a written service credit purchase cost decreased from 10 to 5 business days in 2016.

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2013 2014 2015 2016

You 80 80 80 81

Peer Avg 78 79 81 81

Trends in Total Service Scores

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The relationship between service and pension administration cost in the CEM universe:

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Relative Admin. Cost =Admin. Cost - All Average Admin. Cost

Relative Service versus Relative Cost

All Peers You

Iowa PERS has consistently provided a high level of service while maintaining costs low relative to it's peers.

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Key Takeaways:

Cost • Your total pension administration cost was $53 per active member and annuitant. This was $49 below the peer

average of $102 (and $33 below the peer median of $85).

• Your total pension administration cost per active member and annuitant increased by 5.7% per annum between 2013 and 2016.

• You continue to have the lowest administration costs in your peer group. Service • Your total service score was 81 in a high-scoring peer group. This was equal to the peer average, but below the peer

median of 85.

• Your service score increased from 80 to 81 between 2013 and 2016.

• Six of your peers had scores that ranked in the top 10 of CEM's global participants.

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Investment Benchmarking Service

A benchmarking solution for your DB plan

CEM Pension Administration Benchmarking Analysis

Iowa Public Employees’ Retirement System

March 24, 2017

Paul Martiniello

[email protected]

+1 (416) 644-8091

Copyright © 2017 by CEM Benchmarking Inc. ('CEM'). Although the information in this document has been based upon and obtained from sources we believe to be reliable, CEM does not guarantee its accuracy or completeness. The information contained herein is proprietary and confidential and may not be disclosed to third parties without the express written mutual consent of CEM.

mailto:[email protected]

Documents

CEM Pension Administration Benchmarking Analysis Investment ... CEM Pension... · NYC TRS Pensioenfonds van de Metalektro ATP NYSLRS PFZW Ohio PERS Rabobank Pensioenfonds Middle East*