You can calculate the risks in your occupational pension administration
It is widely recognised that occupational pension administration is complex. However, it can be difficult to translate that complexity into the risks you face as an employer in kronor and öre. Until now.
With over 30 years of experience in day-to-day administration and analysis of occupational pension arrangements across different organisations, we can now calculate your exposure to the actual costs of errors.
Get in touch to learn more about the risks you face in your current administration.
Broadly speaking, there is a risk that as many as one in five employees has incorrect insurance cover. This includes:
- incorrect reporting of salaries and pensionable pay components
- incorrect premiums being paid (both too much and too little)
- new employees not being reported – and payments continuing for people who have left
These errors also often persist for a long time. We have seen examples of errors continuing for up to 10 years. We also know of many cases where they are never discovered at all. Both the employer and the employee can lose out as a result. The time it takes to discover errors is one of the greatest risks you face as an employer.
Drawing on our experience and testing various hypotheses, we have developed a model that estimates the financial risks you face in your occupational pension administration. We can do this using information you already have, together with our experience and expertise.
What this could look like – a hypothetical example
To illustrate what this could mean in terms of actual financial risk, we have put together a hypothetical example.
Bolaget AB has 1 500 employees with pension schemes ITP1, ITP2, and SAF-LO. The company has an estimated average premium of 4 200 kr and a total annual premium volume of 75 600 000 kr.
Assuming that one in five employees has incorrect insurance cover, in line with the average, and that the errors arose 12 months ago, we can see that Bolaget faces a financial risk of 2 029 000 kr. With the errors having had a direct impact on employees’ pensions and benefits.
Bolaget AB – an example
Number of employees: 1 500
Pension scheme: ITP1, ITP2, SAF-LO
Annual premium volume: 75 600 000 kr
Average premium: 4 200 kr
Error rate: 20%
In-house pension administration:
Internal cost: 540 hours/year
Financial risk: 2 029 000 kr
In addition to the financial risk, Bolaget AB incurs an internal cost for administration across payroll, HR and finance (registration, review, corrections, checks and invoice processing), estimated at 540 hours/year.
Understanding the risks you face is the first step towards safeguarding your employees’ future pensions. Get in touch to learn more about the risks you face in your current administration.
With the goal of ensuring that all employees in Sweden receive the correct pension, we are here to help you with your occupational pension administration.
If you need a more detailed review of your administration, we also offer a comprehensive assessment of your current arrangements. Read more about the assessment of your current arrangements here.
Use your data to calculate and get an estimate of what administrative errors could cost.
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Watch the full recording on the topic of Risks and challenges in occupational pension administration here.