Iowa Public Employees Retirement System

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Iowa Public EmployeesRetirement System

• Resource Analysis and Demand Projection
• - defending the attack of the baby boomers
• May 15, 2001

"Adaptations Required to Meet the Challenges of
the Baby Boomers"
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Introduction

• Leon SchwartzChief Operations Officer, IPERS
• Curt SortebergExecutive Officer Benefits, IPERS
• Drew LightnerDirector, Covansys Corporation

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Todays Discussion

• Strategic Context
• IPERS Overview
• Retirement System Challenges
• Study Objectives and Approach
• Resource Allocation
• Demand and Resource Projection
• Technology Impacts

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Strategic Context

• Three project components Examine, Development,
  Data

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IPERS Overview

• Formed in 1953
• 17B in assets, 61st largest public or private
  pension fund
• Over 300,000 members, 2,400 employers
• Over 45M paid monthly to almost 70,000 retirees
• Investments out performed 79 of other funds
• 90 of members very satisfied with their
  counseling session
• Division in Personnel Department
• Governance changes

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IPERS Organization
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Retirement System Challenges

• Increasing retirements due to the baby boomer
  bubble
• 100 increase number of annual retirements
  (4,641 in FY2000 to 9,311 in FY2013)
• 100 increase in retirees receiving
  benefits(66,681 in FY2000 to over 125,000 by
  FY2015)
• Increasing member expectations
• Peer organizations in the financial services
  industry providing more information and guidance
  with easy access to their customers and members
• IPERS members will expect the same level of
  service, either through personal contact or
  electronic self service

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Retirement System Challenges

• Increasing retirement benefit complexity
• Multiple options and complex eligibility criteria
  
• Requiring more resources to be applied to the
  same transactions
• Potential for additional services DC,
  insurance, retirement education
• Increasing life expectancy of retirees and
  survivors
• Life expectancy for people in the U.S. has
  increased from 68 years in 1950 to almost 80
  years today
• Increases the length of time that each members
  retirements payments are processed and their
  service needs met

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Resource Allocation

• Process Context for resource allocation prepared
  during IT reengineering project in early 2000

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Core Process List

• Member Service Providing
• Member Enrolling
• Member Profile Maintaining
• Member 1099 Inquiry Processing
• Member Annual Statement Inquiry Processing
• Member Termination Notice Processing
• Member Age 70 Notifying
• Retirement Death Benefit Notification Processing
• Member Benefit Estimate Inquiry Processing
• Member Account Verifying
• Member Service Purchase Applying
• Member Counseling
• Member Pre-Retirement Planning Sessions
• Member Reporting
• Member Account Maintaining 
• Employer Member Account Adjusting
• Employer Member Account Investigating
• Member Account Interest Applying
• Member Assignment Processing

Employer Service Providing  Employer
Auditing Employer Enrolling Employer Inquiry
Processing Employer Profile Maintaining Employer
Educating Training Employer Reporting Employer
Account Maintaining  Employer Receipts Processing
Employer Wage Report Processing Employer Account
Adjusting Employer Accounts Receivables
Underpayment Penalty Employer Late Payment
Interest Applying Employer Merge
Processing Member Payment Processing  Retirement
Payroll Processing Member Payroll
Processing Member Voucher Processing and
Paying Member Warrant Reissue Processing Member
Death Benefit Payment Processing Member
Assignment Executing Non-negotiated Warrant
Processing Member Payment Maintaining  Retirement
Direct Deposit Maintaining Retirement Earnings
Limit Enforcing Retirement Payment Profile
Maintaining Retirement Withholding
Maintaining RDODP Workers Compensation Offset
Processing RDODP Earnings Limit Enforcing RPODP
Medical Reexamination Processing
Investment Managing External Reporting  IRS Tape
Submitting State IRS Tape Submitting CAFR
Preparing Actuarial Report Preparing General
Accounting Gen'l Ledger Production Cash
Management Budget Preparing Accounting
Administering Accounts Receivable
Monitoring Accounts Payable Monitoring Application
Developing Data Cleaning Technology
Supporting Systems Operational Supporting Managing
/Supervising Training Company Meetings Office
Service Providing
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Study Objectives

• The Resource Analysis and Demand Projection Study
  was initiated with the following objectives
• Predict baby boomer impact on future IPERS
  staffing requirements
• Document operational issues facing IPERS in the
  future
• Estimate impact of technology to increase staff
  productivity or to reduce demand

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Approach

• IPERS approach to projecting future staffing
  requirements involved
• Comparing IPERS staffing level with other
  retirement systems
• Utilizing a process model context to associate
  IPERS staff with the work performed to provide
  services to members
• Allocating work across the processes by all IPERS
  staff
• Applying demand drivers to these values to
  project future staffing requirements
• Estimating the productivity impact of
  implementing certain technologies
• Projecting the IPERS staffing requirements if
  these technologies were implemented

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ApproachIPERS Staffing Comparison

• IPERS FY2001 staffing is 79 FTEs
• IPERS larger in terms of assets and members
• IPERS at 85 of average relative to assets
• IPERS less than 50 relative to members
• Strong Caution on comparison

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Resource Allocation

• Each IPERS staff member allocated time (1,600
  hrs) to 85 detail processes
• Potential staff issues with exercise

• Benefits 47 FTEs with 40 member service
  providing 24 retirement application processing
• Operations 33 FTEs with 84 in support
• Applications Development 8 staff, Data Cleaning 4
  staff, Technology supporting 4 staff
• Legal/Comm 6 FTEs, Investments 9 FTEs

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Demand Projection

• Demand drivers associated with each process
• Retirements The number of new retirees each year
  is projected based on an analysis of current
  members and an assumption that they will retire
  at age 62

• Total Retirees The average growth in total
  retirees is projected at 4 based on estimates
  provided by IPERS actuary
• Public Employment growth in total public
  employees projected at 2/year
• Employers assumed that this number will not
  change
• Scheduled Tasks projected to grow at 0.5 per
  year
• Core Staff Change The demand for some of the
  supporting workflows, such as, technology
  supporting, general management, and office
  services are projected to grow based on the core
  staff that is to be supported.
• Manual Guiding workflows and some of the
  supporting workflows are projected based on a
  manual method. Guiding workflows are projected
  to increase 1 FTE in 2005 and 2010 based on
  increased need to provide support to a larger
  staff.

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Resource Projection

• Increase in FY02 due to staffing requests current
  under consideration by the legislature
• Steady increase in staffing requirements till
  FY07
• Baby boomer retirements rapidly grow between FY07
  and FY09
• Steady growth from FY09 thru FY12
• Spike again in FY12 thru FY13

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Resource Projection

• Total staffing requirements grow from 79 today to
  143 by 2015
• Major increases in
• Member Service Providing (95)
• Application Processing (99)
• Member Payment Processing (67)
• Salary and benefit expense increases 121

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Technology Impacts

• Productivity improving technologies assessed
• Document Management (Imaging)
• Work Flow
• Internet
• Core System Replacement
• Potential productivity improvement estimated for
  each technology for each process
• Productivity benefits estimated to occur over 2-3
  years after implementation
• Multiple issues associated with technology
  implementation make impact difficult to estimate

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Technology Impacts

• SWAGs based on experience discussions with
  IPERS mgmt
• Doc management impacts across the board
• Internet impact large in employer and payment
  maintaining
• Work flow across the board
• Core system impact large in payment process and
  application maintenance.

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Technology Adjusted Resource Projection

• Staff requirements peak at 120 versus 145 without
  technology
• IPERS able to absorb growth until FY2008

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Technology Adjusted Resource Projection

• Decrease in employer service staff due mainly due
  to Internet site
• Total staff increase of only 24 versus over 50
• Still shows significant increase in member
  services (55), application processing (75), and
  payment processing (31)
• Overall personnel cost savings of 17M over 13
  years
• Enhance employee satisfaction due to reduction of
  manual tasks
• Reduced fiduciary risk due to document
  management, accurate computations, closer
  tracking of member information

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Resource Projection

• IPERS believes that the estimate of future
  staffing requirements presented above is
  conservative because
• IPERS increasing benefit complexity, members
  expectations, and longer expected life span have
  not been factored into this projection.
• IPERS provides a limited set of services when
  compared to other retirement systems (e.g. DC
  plans, and health, life, and other insurance
  products).
• IPERS current low level of staff when compared to
  other retirement systems. (85 of average
  relative to investment and less than 50 based on
  members).
• Strategic weaknesses like research, active member
  communication, and quality assurance.

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Conclusion

• The Iowa Public Employees Retirement System
  (IPERS) is facing critical choices due to the
  predicted increase in the demand for services
  from its members. IPERS must
• Dramatically increase staff, or
• Increase the investment in technology with a more
  modest increase in staff, or
• Significantly reduce member services

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Thank YouQuestions?