The Iowa Public Employees Retirement System Pension Administration Benchmarking Report FY 2018

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The Iowa Public Employees Retirement System Pension Administration Benchmarking Report FY 2018 Paul Martiniello Director, CEM Benchmarking March 22, 2019 Des Moines, Iowa 2019 CEM Benchmarking Inc.

How you can use CEM s pension administration benchmarking service: Measure and Manage Costs Understand the factors influencing costs with detailed peer analysis of: Staff costs Transaction Volumes Productivity Measure and Manage Service An analysis of over 120 key performance metrics that compares: Your service levels relative to your peers Service areas to improve or reduce Global Best Practices Leveraging and sharing the wealth of knowledge and expertise that exists among CEM clients, the CEM team, and other industry experts through exclusive: Conferences and Workshops Online Peer Intelligence Network Insights Research Papers 1

64 leading global pension systems participate in the benchmarking service. Participants Canada United States STRS Ohio United Kingdom* APS Arizona SRS Texas County and District RS Armed Forces Pension Schemes Alberta Teachers RF CalPERS TRS Illinois BSA NHS Pensions BC Pension Corporation CalSTRS TRS Louisiana Pension Protection Fund Canadian Forces Pension Plans Colorado PERA TRS of Texas Principal Civil Service Pension Scheme FPSPP Delaware PERS Utah RS Scottish Public Pension Agency LAPP Florida RS Virginia RS Teachers' Pensions Scheme OMERS Idaho PERS Washington State DRS Universities Superannuation Scheme Ontario Pension Board Illinois MRF Wisconsin DETF Ontario Teachers Indiana PRS OPTrust Iowa PERS The Netherlands* RCMP KPERS ABN Amro Pensioenfonds Retraite Quebec LACERA ABP SHEPP Michigan ORS bpfbouw Nevada PERS Pensioenfonds Metaal en Techniek North Carolina RS Pensioenfonds Vervoer NYC ERS Philips Pensioenfonds NYC TRS PFZW NYSLRS Rabobank Pensioenfonds Ohio PERS Shell Pensioenfonds Oregon PERS St. Pensioenfonds Openbaar Vervoer Pennsylvania PSERS Spoorwegpensioenfonds PSRS PEERS of Missouri South Carolina RS South Dakota RS 2

The custom peer group for Iowa PERS consists of the following 12 peers: Custom Peer Group for Iowa PERS Membership (in 000's) Active Peers (sorted by size) Members Annuitants Total Washington State DRS 321 186 507 Wisconsin DETF 257 203 461 Indiana PRS 255 157 411 STRS Ohio 211 160 371 Colorado PERA 242 118 359 Arizona SRS 207 150 357 Oregon PERS 173 148 321 Illinois MRF 176 127 302 Iowa PERS 170 121 291 PSRS PEERS of Missouri 127 92 219 NYC TRS 128 89 217 TRS Louisiana 91 79 170 Peer Median 191 137 339 Peer Average 197 136 332 3

Your total pension administration cost was $51 per active member and annuitant. $450 $400 $350 $300 $250 $200 $150 $100 Pension Administration Cost Per Active Member and Annuitant $000s $ per Active Member and Annuitant Category You You Peer Avg Front-office Member Transactions 1,213 4 13 Member Communication 2,513 9 16 Collections and Data Maintenance 1,607 6 7 Back-office Governance and Financial Control 879 3 8 Major Projects 3,568 12 11 Information Technology 3,289 11 22 Building 638 2 8 Legal 291 1 3 HR, Actuarial, Audit, Other 757 3 9 Total Pension Administration 14,754 51 96 $50 $0 You Peer All Peer Avg All Avg Your total pension administration cost was $14.8 million. This was $45 per member below the peer average of $96. Your cost per member was lower in all but one category. 4

Reasons why your total cost was $45 per member below the peer average: Reason You Peer Avg Impact $ per active member and annuitant 1. Fewer front-office FTE per 10,000 members 1.4 3.7 -$30 2. Higher third party costs per member in the $4 $4 - front-office 3. Higher costs per FTE Front-office Salaries and Benefits $99,842 $81,595 Back-office Salaries and Benefits $122,700 $122,614 Blended Average $107,486 $95,919 Pay-as-you-go Benefits $796 $847 Building and Utilities $10,158 $13,126 HR $1,640 $3,421 IT Desktop, Networks, Telecom $10,619 $12,821 Total $130,699 $126,134 $3 4. Lower support costs per member Governance and Financial Control $3 $9 Major Projects $12 $11 IT Strategy, Database, Applications $10 $16 Actuarial, Legal, Audit, Other $3 $11 Total $29 $47 -$18 Total -$45 5

You had less front office FTE per 10,000 members than your peers. 9.00 8.00 7.00 6.00 5.00 4.00 Front Office FTE Per 10,000 Members Your 1.4 front office FTE per 10,000 members was 61% below the peer average of 3.7. This decreased your total cost per member by $29.87 relative to the peer average. Your front office FTE per 10,000 members is a function of two components: productivity and workloads. 3.00 2.00 1.00 0.00 You Peer Peer Avg 6

Where did you do more/fewer transactions? Volume per 1,000 Active Members and Annuitants Peer Average More/ -Less Front Office Transactions (or Transaction Driver) You 1. Member Transactions a.pension Payments (Annuitants) 415 413 1% b.new Payee Inceptions 24 25-4% c.refunds, Withdrawals, and Transfers-out 31 29 6% d.purchases and Transfers-in 0 32-99% e.disability Applications 0.8 1.9-56% 2. Member Communication a.calls and Emails 384 626-39% b.incoming Mail 172 470-63% c.members Counseled 1-on-1 28 30-5% d.member Presentations 0.2 1.7-86% e.written Estimates 36 34 6% 3. Collections and Data Maintenance a.data and Money from Employers (Active Members) 585 587 0% b.service to Employers (Active Members) 585 587 0% c.data Not from Employers (Actives, Inactives, Annuitants) 1,240 1,342-8% Weighted Total 30,542 44,611-32% 7

You had higher transactions per FTE (total productivity). 250,000 200,000 150,000 100,000 50,000 Weighted Transactions per Front Office FTE Your weighted transactions per front office FTE were 79% above the peer average. Activity Volume per FTE Activity You Peer Avg +/- Member Transactions Pension Payments 48,395 21,453 26,941 New Payee Inceptions 1,692 742 950 Refunds & Transfers-out 5,654 3,934 1,720 Purchases and Transfers-in 120 1,152-1,032 Disability Applications 593 227 366 Member Communication Calls and Emails 26,048 11,642 14,405 Incoming Mail 29,412 22,583 6,829 Members Counseled 1-on-1 2,104 1,331 773 Member Presentations 51 136-86 Written Estimates 3,638 2,215 1,422 0 You Peer Peer Wtd-Avg Collections and Data Maintenance Data and Money from Employers 28,396 22,696 5,700 Service to Employers 43,687 47,286-3,599 Data Not from Employers 76,896 147,418-70,522 Weighted Total 212,894 118,629 94,266 8

You paid less for back-office activities. Back-Office Activities - Cost per Member More/ Back-Office Activities You Peer Avg -less Governance and Financial Control $3.31 $9.28 -$5.98 Major Projects $12.24 $11.19 $1.05 IT Strategy, Database, Applications $10.07 $16.25 -$6.19 Actuarial, Legal, Audit, Other $3.39 $10.55 -$7.16 Total $29.00 $47.28 -$18.27 Paying less for back-office activities decreased your total cost per member by $18.27 relative to the peer average. 9

Cost Trends Trend in Total Pension Administration Costs $120 $100 $80 Changes to total administration costs per member yearover-year have been mostly due to variances in major project spending. Iowa PERS continues to have the lowest administration cost in its peer group. $60 $40 $20 $0 2015 2016 2017 2018 You $45 $53 $55 $51 Peer Avg $103 $104 $101 $98 10

Your total service score of 84 was above the peer average of 82. 100 90 80 70 60 50 40 30 20 10 0 Total Service Score You Peer All All Median Peer Avg Service Scores by Activity Activity Weight You Peer Average 1. Member Transactions a. Pension Payments 10.0% 100 100 b. Pension Inceptions 7.4% 88 83 c. Refunds, Withdrawals, and Transfers-out 1.3% 100 78 d. Purchases and Transfers-in 3.1% 92 79 e. Disability 3.8% 90 86 2. Member Communication a. Call Center 21.0% 81 72 c. 1-on-1 Counseling 7.4% 97 86 d. Member Presentations 6.5% 70 96 e. Written Pension Estimates 4.7% 93 87 f. Mass Communication Website 21.3% 74 79 News and targeted communication 2.8% 83 81 Member statements 4.7% 91 84 3. Other Satisfaction Surveying 5.0% 76 65 Disaster Recovery 1.0% 100 92 Weighted Total Service Score 100.0% 84 82 11

Examples of key service metrics included in your service score: Select Key Service Metrics You Peer Avg Member Contacts % of calls resulting in undesired outcomes (busy signals, messages, hang-ups) 5% 10% Average total wait time including time negotiating auto attendants, etc. 36 secs 231 secs Website Can members access their own data in a secure environment? Yes 92% Yes Do you have an online calculator linked to member data? Yes 92% Yes # of other website tools offered such as changing address information, registering for counseling sessions and/or workshops, viewing or printing tax receipts, etc. 12 14 1-on-1 Counseling and Member Presentations % of your active membership that attended a 1-on-1 counseling session 4.8% 5.1% % of your active membership that attended a presentation 1.9% 7.1% Pension Inceptions What % of annuity pension inceptions are paid without an interruption of cash flow greater than 1 month between the final pay check and the first pension check? 100.0% 90.6% Member Statements How current is an active member's data in the statements that the member receives? 3.0 mos 2.3 mos Do statements provide an estimate of the future pension entitlement? Yes 83% Yes 12

Your service score increased from 78 to 84 between 2015 and 2018. Trends in Total Service Scores 90 80 70 60 50 40 30 20 10 0 2015 2016 2017 You 78 79 82 Peer Avg 79 80 81 2018 84 82 You've improved in almost all areas with the biggest improvements made in: Satisfaction surveying: You've added a number of activities that are now being surveyed; this includes pension inceptions, written estimates, purchases, refunds and disability. Call center: Your undesired outcomes, such as abandoned calls in menu, in queue and on hold, dropped from 6.3% to 5.1%. Also, you now offer your members information regarding their cost to purchase service credit over the phone. Lastly, your call wait time decreased from 86 seconds to 36 seconds. Website: You have added more functionality to your website, such as the allowing members to now use a service credit calculator and register for presentations. Trend analysis is based on systems that have provided 4 consecutive years of data (11 of your 12 peers). Historic scores have been restated to reflect changes in methodology. Therefore, your historic service scores may differ from previous reports. 13

Relative Service = Service Score - All Average Score The relationship between service and pension administration cost in the CEM universe: 20 Relative Service versus Relative Cost 10 0-10 -20-30 -$200 -$100 $0 $100 $200 $300 Relative Admin. Cost = Admin. Cost - All Average Admin. Cost All Peers You Iowa PERS has consistently provided a high level of service while maintaining low costs relative to its peers. 14

Key Takeaways Costs Your total pension administration cost of $51 per active member and annuitant was $45 below the peer average of $96. The primary reasons why is that you have higher total productivity. Iowa PERS continues to have the lowest administration cost in its peer group. Service Your total service score of 84 was above the peer average of 82 in a high scoring peer group. Six of your peers had scores in the top 10 of CEM s global participants. Your service score increased from 78 to 84 between 2015 and 2018. 2019 CEM Benchmarking Inc. 15