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<p>June, 2025</p>
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<p>Insights from CEM Benchmarking’s annual Pension Administration Survey consistently highlight key industry trends each year, and one of the most critical currently is the modernization of legacy systems. This is not just a background task; it is a strategic priority. Our 2024 survey data shows that a significant 46% of participating global pension funds are replacing their central administration system, and 40% finished doing so within the past five years. This trend extends to related systems like CRM, member and employer portals, and HR interfaces, all to improve member experience and how efficiently things run.</p>
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<p>To explore these changes further, we discussed the details of modernization with Edsart Heuberger, the Product Manager for our Pension Administration Benchmarking Subscription. His insights and our wide range of data paint a clear picture of the challenges and opportunities facing pension administrators today.</p>
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<h2 class="wp-block-heading" id="h-why-modernize-now-the-twin-drivers-of-change">Why Modernize Now? The Twin Drivers of Change</h2>
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<p>The decision to take on the complex and often expensive process of system modernization typically comes down to two main reasons:</p>
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<p><strong>Ensuring Business Sustainability</strong><strong>:</strong>&nbsp;Legacy systems eventually become outdated. As Edsart notes, ” It really comes down to issues with the long-term sustainability of the current pension administration system.” This challenge is threefold: technical debt grows, internal staff with the knowledge and skills required to maintain the legacy systems retire and are difficult to replace, and third-party vendor support fades over time. Modernization becomes necessary to keep things running smoothly and reliably.</p>
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<figure class="wp-block-image"><img src="https://www.cembenchmarking.com/wp-content/uploads/2025/04/Modernization-of-Legacy-Systems-small.jpg" alt="" class="wp-image-2690" title="Modernization of Legacy Systems small"/></figure>
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<p><strong>Meeting Evolving Member Expectations:</strong>&nbsp;Today’s members benchmark their service experiences against other industries, which are often far ahead of the pension sector technologically. “Member expectations are higher than ever before</p>
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<p>Both members and employers engage with companies that provide superior (digital) experiences,” Edsart explains. Failing to modernize risks reduces member trust and satisfaction. Outdated technology limits the ability to modernize business processes, improve digital member engagement, and better decision-making by using data analytics. This drive for a better member experience often requires the adoption of cloud computing, especially as organizations start to use AI and machine learning.</p>
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<p>While improving the member experience is crucial, modernization is equally about achieving “operational excellence.” This means optimizing processes, increasing efficiency, reducing waste, and ultimately delivering better service at a reasonable cost. Modern systems allow for automation and streamlined workflows that are impossible with outdated technology.</p>
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<p><em>“Plans are clearly considering their ability to keep pace with this change. That said, we still observe that plans that use commercial off-the-shelf solutions require a significant degree of customization.”</em></p>
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