Each year for the last decade, Colorado PERA has opened its operations to an international benchmarking firm that evaluates and compares the performance of retirement systems from around the globe. CEM benchmarking is a global leader in evaluating the customer service performance and management costs of large pension funds like PERA.
PERA provides CEM with extensive information about its management, administration, and budgeting on an annual basis, allowing for comparisons to other retirement funds around the globe.
Typically, PERA members only interact with one pension system—PERA. Some members may be eligible for Social Security, but the federal program does not lend itself to an apples-to-apples comparison to PERA. Members cannot easily evaluate PERA’s service delivery and management costs with other retirement systems. PERA strives to provide an exceptional customer service experience for its members while operating at a low cost (thus leaving more investment funds for the benefit of members and retirees), so measurement and evaluation from an external consultant like CEM gives PERA’s Board, and its management, members, and retirees an outside perspective on its performance.
CEM evaluates 68 pension funds from Canada, Denmark, United Arab Emirates, the Netherlands, United Kingdom, and the U.S., providing a diverse array of retirement systems from which it can identify best practices and establish benchmarks against which PERA can be measured.
As part of its assessment, CEM compares PERA to 13 U.S. funds that are similar in membership size. For 2012, PERA’s administrative costs were well below the average of both the 13 funds in its peer group and the 68 pension funds evaluated across the globe. PERA’s annual pension administration costs were $45 per active member, inactive member, and retiree, or $12 below the peer average of $57. The average cost across all 68 funds was $94.
Source: CEM benchmarking presentation to the Colorado PERA Board of Trustees, September 2013.
The reasons for PERA’s lower than average costs included higher employee productivity and lower costs for “back office” activities like information technology and financial control. CEM noted that PERA has a long history of using Internet-based applications for service delivery like applying for retirement online and calculating a future retirement benefit using PERA account information, and that also helped to lower costs.
PERA’s overall service score, measuring the customer service PERA provides its members and retirees, was 86 out of 100—notably higher than the median score of 77 for all 68 plans as well as higher than the median score of 82 for PERA’s 13 peer retirement funds. Only six funds out of the 68 measured had higher service scores than PERA.
Source: CEM benchmarking presentation to the Colorado PERA Board of Trustees, September 2013.
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