Assessing social inflation’s disruption to data, metrics, and forecasts: 10 mitigation strategies
Social inflation has disrupted the economy and insurance industry, but how do we measure and mitigate the impact?
Milliman has long had a strong relationship with Taft-Hartley Defined Benefit Plans. We have served as plan actuary for many Taft-Hartley plans large and small. In recent years, we have seen growth in Taft-Hartley Defined Contribution Plans and we have worked to continuously expand our partnerships with multiemployer fund administrators. We strive to provide flexible, convenient, and innovative solutions to the members of multiemployer DC plans.
Within many labor unions, employment with participating employers can be a very fluid state. Union members move from employer to employer pursuant to the collective bargaining agreement (and the various retirement plans offered). In many cases, contributions to a Taft-Hartley plan are made for a union member by several different employers. In this environment, it can be difficult for members to track the contributions made by various employers on statements. While our web pages were designed with the ability to summarize contributions or show detail of each contribution made, statements were only built to reflect the total contributions made over the reporting period. This summary of contributions each quarter resulted in numerous questions to fund administrators from members of the plans wondering which contributions were still outstanding.
Milliman saw an opportunity to better serve its multiemployer clients by displaying an itemized breakdown of each contribution by employer.
We recognized the need to display contributions by individual employers and we decided to enhance our recordkeeping and reporting capabilities. As a result of the enhancements, greater possibilities of data storage flexibility were discovered.
Fund administrators send contributions from hundreds of employers on a single data file each pay period. We needed to determine how all of these employers could be tracked in combination with thousands of members—each with multiple contributions per pay period—without creating a burden for the client.
In order to report the employers, modifications were made to the contribution files sent by the fund administrators. The files originally contained the employer names, which were cumbersome and difficult to monitor, so a code was assigned to each that could be stored in the recordkeeping system. We wrote a translation program to recognize new contractors as they were added to the contribution files and automatically added them into the system and “tagged” the contribution they were associated with.
As new data was added to the recordkeeping system, we worked with our statement vendor to create a more comprehensive and detailed method of display, allowing for itemized and individualized reporting. Total contributions remain on the statements, but members can now reconcile the hours worked and contributions made on their behalf by employer and time period. $50 contributed by Employer X is illustrated with the corresponding pay date, $75 contributed by Employer Y by pay date, and so forth. For members with 401(k) plans, this feature allows them more easily track contributions to their W-2s at the end of the year.
The client and membership were delighted with the new statement layout and the efforts Milliman took to make this possible. Employers whose contributions lag now have proof of each contribution to the member, and the members then have fewer questions to ask of the fund administrators. As a result of this enhancement, the majority of our multiemployer DC clients are adding this capability to their plans and referring us additional Taft-Hartley DC business.