How Do I Choose the Best Pension Software?

Geri Terzo

Pension administrators need to maintain records on individual employees for retirement. Selecting the best pension software will help in the administration of the plan and also allow for the quick recall of information. The best pension software will be cost-effective and appropriate for the needs of the pension system whether it's a public or private plan that is large or small.

Woman holding a disc
Woman holding a disc

Personnel who oversee a company's pension plan use equations to determine the anticipated benefit payout for plan members, or employees. The factors that are used include an employee's salary, years of employment, and the value of cash contributions. Also, the total value of a pension is affected by the investment performance of financial securities. A pension software program should be able to quickly calculate a plan member's benefits using criteria specific to the plan sponsor, or employer.

The best pension software will be a program that suits the needs of the plan sponsor. Certain programs may be designed for the Internet, which will allow plan administrators to access the database from any remote location. A provider may also develop a product that needs to be downloaded on a client's internal intranet platform, which may be a more tailored version of pension software. Both versions should be able to protect the sensitive data that is inherent in maintaining retirement and investment records.

Benefits for pension plan members can be determined in a straightforward manner. When there is a variable in the equation, such as a divorce, the process becomes more complex. The best pension software program may be one that is designed to calculate the benefits for the retiree and an ex-spouse, who remains entitled to some of the payout. Some developers allow potential customers to review the product for no charge to determine if the program is sufficient, and this may help in narrowing down different providers to the one that is most suited for you.

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Certain employers, especially large ones, may offer more than one pension to employees. There are different types of pensions, including a defined benefit plan, where the employer decides on investments for employees, and a defined contribution plan, where plan members decide which investments to make. A plan sponsor that offers multiple plans may need to select pension software that can handle making calculations for different pension types. It is important to make sure the program is compatible with the types of pensions offered by the employer. Also, the best solution may not always be offered by the software company with the longest history, but the track records of a firm and the satisfaction of other clients are good benchmarks of performance.

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