Title of Nomination: CalPERS Empowers Its Members with Web "Self-Service" Project/System Manager: Teri Lynch Title: Assistant Division Chief Agency:

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1 Title of Nomination: CalPERS Empowers Its Members with Web "Self-Service" Project/System Manager: Teri Lynch Title: Assistant Division Chief Agency: CalPERS Department: Information Technology Services Address: 400 P Street, Suite City: Sacramento State: CA Zip: Phone: Fax: teri_lynch@calpers.ca.gov CATEGORY: Digital_Government_G_to_C Person Nominating (if different): Jack Corrie Title: CIO Address: 400 P Street, Suite 2348 City: Sacramento State: CA Zip: Phone: Fax: jack_corrie@calpers.ca.gov

2 CalPERS EMPOWERS ITS MEMBERS WITH WEB SELF-SERVICE Executive Summary The California Public Employees Retirement System (CalPERS) is the largest public pension fund in the United States with a current investment portfolio of over $133.8 billion. It serves over one million active members, retirees, survivors and beneficiaries through its retirement benefit programs, and pays over $6.3 billion in retirement benefits annually. The membership of CalPERS retirement program is comprised of approximately one-third State employees, one-third employees of the 2,519 local public agencies that contract with CalPERS for retirement benefits, and one-third classified school employees. In addition to the retirement program, CalPERS administers a statewide health program providing benefits to State and contracting public agency employees. Like most insurance companies and pension firms, CalPERS was a traditional, paper-based organization. And, whether requests came in via mail or phone call, it was typically several weeks before a member received a response to his/her request. For example, if a member sent in a request for a retirement estimate, it took anywhere from weeks to process! Staff were able to manually process approximately 2,000 requests per month and there was a backlog of 30,000. In an effort to reduce the volume of requests received, CalPERS established a requirement that an employee had to be 45 years old or older before they could request an estimate. Even that didn t make a dent in the workload. Today, however, as a result of implementing the Retirement Planning Calculator System (RPCS), there is no backlog and members are actually completing an average of 30,000 estimates a month online!!!! As a result, CalPERS staff are now able to focus on the more unique, complex member calculations rather than those that are routine. The transition to member self-service was quick. Since CalPERS is extremely focused on quality customer service, no one could dispute the value of providing another means for our members to do business with us. The initial rollout included distribution of Personal Identification Numbers along with the ability to view Annual Member Statements online. Next came the calculators and, then, the ability to 1) change address/phone number, 2) order forms and publications, 3) request official retirement estimate and 4) register for retirement seminars and financial workshops. CalPERS customer base was ripe for change and change is what they got and the results have been significant! The key benefits derived as a result of this transformation include: Dramatic increase in web usage traffic increased to over one million hits per week! Marked decrease in call center volumes. Fifty percent reduction in manual publication orders! Receive and process nearly 18,000 orders online each month! Time required to process retirement estimates reduced from weeks to minutes! Time required to process official retirement estimates reduced from days to less than 3! Improved customer service as a result of providing an additional business channel, 24x7 services and faster transaction processes. Significantly streamlined business processes. Reduced cost of transacting business. Increased access and personalization for business critical information. As a result of its self service initiative, CalPERS is able to provide its customers better service at a lower cost to the organization. Page 1

3 CalPERS EMPOWERS ITS MEMBERS WITH WEB SELF-S ERVICE A. Project Description The California Public Employee s Retirement System (CalPERS) manages pension and health benefits for more than 1.3 million California active and retired public employees and their families. In the course of managing members accounts, CalPERS has routinely handled tens of thousands of pages of paper forms on a monthly basis. Those days, however, are rapidly coming to an end with the implementation of web-based member services or Member Self-Service (MSS). In 1999, CalPERS adopted MSS as a key business strategy for reducing the cost and volume of manual processing while enhancing customer service. Most specifically, the goals were to 1) increase the quality of customer service, 2) improve operational efficiencies, and 3) reduce overall operating expenses. CalPERS believed they could use the Internet to promote a higher level of customer service than was possible to achieve with the existing paper-based systems. With that in mind, they set out to provide a robust suite of applications and a secure electronic infrastructure that would allow members to transact routine business with CalPERS via the Internet anytime, any place that was convenient for them. No need to come into CalPERS offices. No need to call. Just log in with a User ID and password and do your business! The MSS Suite provides a highly secure Government to Customer (G2C) environment. It is a collection of portal-based applications that allow members to view their annual statements of account, develop and save various retirement scenarios, calculate the cost of buying back service, change address and phone numbers, request publication and register for retirement workshops and financial planning seminars. The MSS Suite consists of the following applications: Annual Member S tatement. Members can view their retirement account balances as of June 30 th of the prior year. Retirement Planning Calculator. Members can use this calculator to provide immediate retirement estimate results An MSS Transaction Screen based on their selected retirement date. This information can be saved for comparison to other results at a later time. If the member has a Personal Identification Number (PIN), most of the pertinent data can be automatically loaded for them based on the information contained in their retirement account record. Publications Ordering. Members can view or print whatever forms and/or publications they need immediately. Additionally, they can place an order online for up to two copies of any of the materials and have them mailed directly to their home within three to five business days. Members can check the status of their orders at any time by logging on to their account. Formal Retirement Estimate. Members can request up to two personalized estimates of their retirement allowance per month if they are within one year of retiring. Requests may also be submitted for disability and industrial disability retirement estimates. Service Credit Cost Estimator. Functions similarly to the Retirement Planning Calculator. Allows members to determine the cost for buying back service lost due to military duty, maternity leave, leave of absence, redeposit of withdrawn funds, service prior to membership, etc. Address Change. Allows members to change their home address, mailing address, address, work and home phone numbers online. Page 2

4 Seminar Registration. Using their PIN, allows members to sign up for free retirement seminars and financial planning workshops. Members can view available dates, secure immediate enrollment, or they can cancel their enrollment or transfer to another date and time. Retiree Open Enrollment. Allows retired members to enroll in and/or change their enrollment in CalPERS health plans via the Web. This information is then automatically updated into the corporate Health System via the Automated Communications Exchange Systems (ACES). Architectural Overview The MSS Suite leverages the Internet to provide efficient self-service capabilities. Internet technology eliminates incompatibilities between disparate systems to provide a common denominator that allows the broadest customer base possible to do business with CalPERS electronically. Technical Environment The suite of applications are accessed via the enterprise portal. The applications available to any given visitor to the site are dependent upon who they are and the level of security access they have been granted. Data is pushed and pulled between the web and legacy applications via middleware. Extending CalPERS core systems to the Internet without rewriting existing systems proved to be one of the more critical challenges of this effort. These existing systems involve complex interfaces with other state agencies and manage data using both UNIX- and mainframe-based systems. Extending the core systems to the Internet to minimize manual data entry required the rediscovery and programmatic implementation of hundreds of business rules. This effort was further compounded by the need to minimize the presentation of this complexity to the many diverse MSS end users and maintain a user friendly and efficient system. Security and Privacy Considerations In developing the MSS Suite, two key security issues required careful consideration. First, because the applications are transaction-based, all data is keyed to individual social security numbers. Protecting each member s privacy is of utmost importance. Second, while the enterprise portal efficiently extends CalPERS core resources to the Internet, special precautions needed to be taken to protect CalPERS enterprise resources and data from outside intrusion. As a result, the security architecture was designed to: 2UDFOH3RUWDO /LVWHQHU LQN+4. ([LVWLQJ&DO3(56L$65HOHDVH,QIUDVWUXFWXUH +3+38;'%6HUYHU DFH3PVV3PFG3 $&(63D\URO ([WUDFW +3+38; '%6HUYHU Provide members with the confidence that DFH/PFG/FRU/FRUWUQJ information they send and receive is secure; and,, Provide CalPERS management with the confidence that their information assets are secure. CalPERS members are issued PINs to use in accessing their personal data. PIN is the implementation of a secure login infrastructure based on the Oracle Single Sign-On (SSO) technology. The PIN : HE8VHUV,QWHUQHW Development tools: Oracle s jdeveloper and the Cleveland Framework Application Server: Oracle 9iAS Database Server: Oracle8 on HPUX11 Load balancing: Cisco Local Director Web monitoring: HP OpenView, WTO, VPIS Failover: HP Service Guard QA: SQA Team Test Performance Testing: Mercury Interactive LoadRunner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age 3

5 functionality allows applications to be rolled out and targeted at members in a secure manner. It implements a generalized secure authentication and authorization mechanism that can be relied upon by CalPERS application designers. The PIN process consists of the following components: Unauthorized Access Authentication and Authorization system Member Self-Registration Secure PIN Distribution Administration and Help-Desk Functions PIN includes key security features that guard against unauthorized access to member-related data access that might ultimately jeopardize member assets: Authentication: PIN requires a username and password to authenticate a user (i.e., verify that a user has the right to access the system). Authorization: Each user s account determines which functions and data that user can access. Members can view and download only data that belongs to them. Protection: The PIN security architecture uses the concept of a de-militarized zone (DMZ) to prevent unauthorized access to core systems and information. Isolation: As shown, users outside the DMZ cannot update an internal core database; they can only access a mirror of the enterprise data, thus protecting CalPERS core data assets from outside intrusion. Unauthorized Disclosure and Data Alteration The MSS Suite prevents unauthorized disclosure by not allowing transmittals of unprotected data over the Internet, thereby preventing unauthorized interception of transmissions to obtain sensitive information. MSS users are required to use browsers that include Secure Sockets Layer (SSL) with 128-bit encryption (which has never been broken). Furthermore, if even a single character in the message is altered en route, the receiving computer will generate a different code and alert the recipient that the message is not legitimate. Providing a secure environment includes both offensive and defensive techniques. The above list describes the defense mechanisms that are in place to prevent security breaches. A comprehensive security architecture must also provide mechanisms to log and monitor key system events to ensure that a secure environment is achieved. Consequently, all transactions within the system are logged to provide traceability of system events, business transactions, and information updates. Each entry includes a timestamp, user, and functional information. B. Relative Significance to the Improvement of the Operations of Government MSS provides the benefit of automation to both CalPERS and the 1.3 million members and 2,500 employers who use its services, easing workloads and streamlining processes. The key operational improvements afforded by MSS include: Reduced manual processing and decrease in Call Center volumes due to dramatic increase in web usage traffic increased to over one million hits per week! Because MSS allows members to calculate their own estimates for retirement and service buy-back as well as order forms, change address and register for Page 4

6 seminars/workshops, there is less paper to handle and data to manually enter on both sides! The most telling example of this process improvement is in the area of retirement estimation. Since implementing the RPCS, time to receive an estimate has been reduced from weeks to minutes and the backlog of requests no longer exists. As a result, CalPERS staff are now able to focus on the more unique, complex member calculations rather than those that are routine. Cleaner member data. Historically, CalPERS has had difficulty maintaining current, accurate addresses for its members. Most often, the only time an address change was triggered was when a member sent in a form requesting some sort of business action and the staff noticed a difference in address. However, now, when a member registers for a PIN and/or uses an online service to request something be mailed to them, the system prompts them to validate their address of record. Based on the PIN registration stats, CalPERS realized that one in every six addresses on file was incorrect. As a result of this new process, CalPERS has updated tens of thousands of addresses and is able to maintain cleaner, more accurate member data. Significantly streamlined business processes. MSS has significantly streamlined the processes for ordering forms, requesting retirement estimates and registering for seminars/workshops. Processes that used to take up to several weeks to complete can now be accomplished with little or no manual intervention by CalPERS. Reduced requests for duplicates. Every year, the Member Services Branch was flooded with requests for duplicate Annual Member Statements. Since this statement is now available online for viewing and printing, such requests have dwindled to almost nothing. This results in not only staff time savings but postage and printing cost reductions as well. Faster, cheaper business transactions via self -service on the web. Reduced security complexity and costs by implementing single sign-on capability for accessing disparate systems (build once, use many). Fifty percent reduction in manual publication orders! Receive and process nearly 18,000 orders online each month! T ime required to process retirement estimate s r e d u c e d from weeks to minutes! Time required to process official estimates reduced from days to less than 3! Improved customer service as a result of providing an additional business channel, 24x7 services and faster transaction processes. I mproved customer service as a result of providing additional channels and faster transaction processes. Infrastructure established to support future CalPERS self -service initiatives. The MSS infrastructure provides the architecture to support the exchange of confidential data between CalPERS and members in a G2C framework. Therefore, any current or future business processes that require the exchange of data with members can be conducted through the MSS enterprise portal. This infrastructure will continue to be leveraged to support other key CalPERS business initiatives. C. Benefits Realized By Service Recipients The key benefits to our customers as a result of this transformation include: Reduced time required to process retirement estimate from weeks to minutes! Reduced time required to process official retirement estimate from d a ys to less than 3! Improved customer service as a result of providing an additional business channel, 24x7 services and faster transaction processes. Significantly streamlined business processes. Able to transact most routine business transactions any time, any place without having to contact CalPERS. Increased access and personalization for business critical information. Page 5

7 Reduced security complexity by implementing single sign-on capability for accessing disparate systems. D. Return on Investments, Short-Term/Long-T e r m P a y b a c k MSS was developed to provide better customer service to over 1.3 million members, active and retired. The benefits derived as a result of this business transformation are staggering. For example, MSS has transformed multi-w e e k, manual p r o c e s ses requiring significant staff involvement into online processes that can be performed within minutes without any intervention from CalPERS staff. Manual publications order s reduced by more than 50%. Backlogs in Member Services related to retirement estimates eliminated. Production of retirement estimates increased from 2,000/month to 30,000/month without any increase in staffing. Improved customer service as a result of providing an additional business channel, 24x7 services and faster tran saction processes. Significantly streamlined business processes. Dramatic increase in web usage; marked decrease in call center volumes. In summary, not only has CalPERS improved its service to its customers significantly but this first step stands to revolutionize the way we conduct business. Building upon the success of MSS, this initial investment is being leveraged to provide additional online services. MSS is the springboard for extending self-service capabilities to its general membership, thus compounding the return on investment in the years to come. Page 6