Pension plan administration can be managed through a variety of arrangements. These arrangements include insourced, where a plan sponsor performs the entire administration internally; co-sourced, where the plan sponsor contracts with an outside vendor to have a portion of the plan administration done externally; and outsourced, where the outside vendor performs the entire administration.
As insourcing has become less common, plan sponsors are turning to outside vendors to co-source and outsource the administration. Both arrangements have advantages and disadvantages. Co-sourcing combines the positive elements of both insourcing and outsourcing, allowing the plan sponsor to maintain control of the administration while using the resources and expertise of an outsourced vendor. Outsourcing removes the burden and complexity of plan administration entirely.
Which is better? When do the advantages of outsourcing outweigh those of co-sourcing? What can businesses do to ensure that pension plan administration is accurate, efficient, and cost-effective? In this article, Milliman’s Julie Sinke explores these questions.