Ensuring Clean Participant Data

Keeping participant data accurate could help plan sponsors avoid dealing with missing participants or a cybersecurity attack.

One of the most critical aspects in maintaining a healthy retirement plan is guaranteeing clean participant data, says John Bikus, president of PBI Research Services, a provider of death audit and location services.

Having correct Social Security numbers and dates for critical life points, including birth and retirement, is integral to identifying missing and deceased participants, Bikus says. He points out that defined benefit (DB) plan overpayments, such as to a deceased participant, also decrease the plan’s assets, affecting its funding.

Bikus adds that the pandemic might have increased the incidence of missing participants, as former employees might have moved or died.

In light of this, plan sponsors should have a system of communications in place to verify or update addresses yearly or periodically, Bikus suggests. He recommends the same thing for verifying or updating beneficiary information.

Educating participants about why it’s important to keep their own data up to date is crucial to keeping data clean, says Rick Irace, chief operating officer (COO) at Ascensus Retirement. It is especially important when starting a new plan or when converting to a new recordkeeper, he adds. At these times, Ascensus’ first-year readiness team explains to participants what their data will be used for and how they can provide it.

Ascensus has created a system that disallows plan sponsors to send incorrect data, says Irace. “If there are certain things that we are requiring them to send, we’re going to ensure that none of those fields come back blank,” he notes.

In addition, Ascensus has set up online forms to have required fields, which prevents users from completing the forms before the necessary information is added. “That is a systematic way to prevent [plan sponsors and participants] from entering bad data before they can send it to us through the system,” Irace notes.

For plan sponsors moving to a new provider or consolidating providers, Ascensus offers a data management and reconciliation service. The company works with payroll providers to decrease the chance of errors.

Irace adds that having clean data also reduces the risk of cybersecurity threats.

Bikus recommends that plan sponsors that are outsourcing duties to multiple providers decrease the number they use to lessen the risk of cybersecurity hacks. Working with multiple providers could create inconsistency and discrepancies in data. The more personal information that’s passed around among providers, the more likely the chance of exposure, and imminently, an attack, he says. “That could expose personal information, which could result in identity theft for plan participants, as well as an attack on retirement plan systems,” he says.