Accurate employee data is the key to a healthy retirement plan. Without it, employers can be exposed to greater risk and correcting bad data takes extra time. But errors happen and some plan sponsors may be struggling with the problems this can cause. Partnering with a provider that actively uses data technology for their plans can significantly reduce the likelihood of errors.
Checking data automatically and instantly
Rigorous data technology can reduce plan errors and costs. For advisers, data management technology decreases time spent chasing data issues, while for third-party administrators it assists with plan administration and ensures accurate data for compliance testing. A proactive process can help employers root out errors that take extra time and money to resolve, or worse, expose them to fiduciary risk. Creating smart, informed plans and solutions based on accurate data also results in plans that best fit the plan sponsor’s needs.
Without data technology in place, a contribution submitted for an ineligible employee will likely not be caught until later. Employers would then face the difficulty of getting the money out as well as incur any potential penalties for this error. However, having data technology in place can catch errors early, preventing time-consuming fixes, as well as eliminating fines or audits. An error, like the submission of an ineligible contribution, would automatically be flagged by a data management technology and immediately amended.
The Standard’s participant data management technology discovered that 65% of payroll files loaded through its system over a year-long period had at least one error or warning. Our proprietary data technology was able to catch 3.2 million errors and warnings, including 56,000 errors which stopped money from going into plans by mistake. Having data-powered technologies in place helps employees feel confident that their plans are running smoothly.
How to find a data-focused partner
It’s important to keep in mind that some providers are more diligent about data management than others, so it’s key to identify a provider that has the technology in place to constantly validate plan data. Avoiding small errors prevents larger issues, from penalties to potentially losing employees’ confidence. Choosing a provider that integrates data technology will not only reduce plan errors, it saves employers both time and money.
Consider asking the following questions when searching for the right provider:
- Do you include data technology services with every plan you offer?
- What steps do you take to make sure data is accurate and readily available?
- How many data points do you check?
- How often do you review payroll data for discrepancies?
- Do you also review data for employees who aren’t signed up for a plan?
- How well does your process work with payroll services?
- Can you share statistics that show how well your technology works?
- How difficult is it for employers to set up a data management service?
Plan sponsors shouldn’t have to worry about plan errors, especially now when their businesses are affected by the pandemic and economic concerns. Selecting a provider that backs their services with data management technology provides peace of mind that a plan is in good shape.