The challenge: A large organization needed to enhance efficiencies in its complex pension administration processes

Milliman was engaged by a large organization with thousands of employees participating in multiple retirement systems to assess and address issues in its pension administration. The plan’s complexity increased significantly following the introduction of redefined pension plan provisions for new employees more than a decade ago, including a variable member contribution structure that added new administrative demands. Pension administration responsibilities are shared across multiple internal and external teams, spanning enrollment, payroll processing, and benefit determination, creating coordination and operational challenges.

The complex contribution rate structure, frequent updates to pensionable earnings codes, and fragmented communication channels have led to significant operational and compliance challenges. These include errors in member contribution calculations, delayed or missed rate updates, and a growing need for remediation. The organization faced additional hurdles due to inconsistent process documentation, limited automation, and strained IT resources.

The approach: In-depth assessment of current pension contribution processes

Milliman conducted an in-depth administrative review of the underlying processes the organization uses to withhold these pension contributions. The primary objectives were:

• To deliver a root-cause analysis of the errors and inefficiencies in member contribution administration
• To assess current practices and identify gaps in communication, documentation, reconciliation, and automation
• To provide actionable recommendations for process enhancements, compliance assurance, and operational improvements

Milliman’s approach involved a multifaceted qualitative assessment.

Stakeholder engagement

Milliman conducted targeted meetings with team members responsible for benefit administration within the organization, with a specific focus on member contribution processes. Discussions covered daily, monthly, and annual processes, focusing on member contributions.

Process mapping and gap analysis

Milliman documented workflows for enrollment, contribution rate determination, payroll integration, and reporting. This identified discrepancies; bottlenecks; and points of failure in communication, documentation, and automation.

Root-cause and impact assessment

Milliman traced errors in member contribution calculations to their source (e.g., missed rate updates, misclassified earnings codes, manual data entry). The review also measured the operational impact in terms of remediation efforts, audit readiness, and compliance risk.

Comparative benchmarking

Milliman compared practices across departments associated with the company and its pension administration to identify best practices and areas for standardization.

Recommendations development

Milliman compiled findings into a phased improvement plan addressing immediate, medium-term, and long-term needs.

Key findings: Milliman identified internal inefficiencies straining pension administration

Milliman’s review identified several core issues contributing to administrative inefficiencies, calculation errors, and heightened compliance risk across the organization’s pension contribution processes.

1. Limited communication between departments
• Departments often operated in silos, leading to missed earnings code changes and contribution rate updates.
• Electronic interfaces with partner departments transmitted incomplete or outdated updates, complicating payroll processing.
• Lack of structured, recurring communication; task-related workflows; and standardized reporting undermined data accuracy and fiduciary oversight.
2. Inconsistent and limited documentation
• Most critical processes relied on undocumented institutional knowledge.
• The absence of standardized documentation and training programs increased operational risk and weakened internal controls.
• Internal and partner departments lacked standardization for common functions.
3. Inadequate reconciliation and audit practices
• Reconciliation focused on file matching, not on verifying correct contribution rates per member.
• There were limited automated error-flagging practices or scheduled periodic audits.
• Responsibilities for data reconciliation and audit were unclear and uncoordinated across internal and external departments.
4. Manual processes and automation gaps
• Key workflows (enrollment, rate changes, monthly reporting) required labor-intensive manual intervention.
• System design flaws, such as an inability to distinguish the correct compensation definition, led to calculation errors and member appeals.
• The internal IT department’s capacity was stretched, with a backlog of enhancement requests and frequent disruptions.

The solution: Phased approach helps improve pension administration

Milliman proposed a phased approach.

Milliman’s review identified the root causes behind administrative errors and inefficiencies, providing a clear road map for remediation.

The findings were instrumental in:

• Driving immediate remediation—departments began to address communication gaps, and initiated file inventories and audit report overhauls.
• Enhancing strategic planning—the phased recommendations informed the development of structured communication channels, standardized process documentation, and prioritization of automation enhancements.
• Improving compliance and member service—implementation of Milliman’s recommendations is expected to reduce errors, streamline member record management, and strengthen audit readiness.
• Fostering cross-functional collaboration—the review highlighted the need for ongoing dialogue between internal and external teams, laying the groundwork for future joint initiatives and sustained operational improvements.

Milliman’s administrative review of the organization’s member contribution process provided critical insights into the underlying causes of operational challenges and compliance risks. By identifying fragmented communication, inconsistent documentation, inadequate reconciliation, and incomplete automation as key issues, Milliman empowered the organization to implement sustainable improvements. The recommended phased enhancements are designed to ensure compliance, operational efficiency, and high-quality member service, supporting the long-term reliability and accuracy of their pension administration.