Oregon Retirement Information Online Network (ORION) Online Member Services (OMS) Category 7: Improving State Operations Submitted by: State of Oregon/ Public Employees Retirement System/ISD Project Completion Date: June 2011 http://www.oregon.gov/pers Jeffrey Marecic, Chief Information Officer Project Sponsor Oregon PERS 1
Executive Summary The Oregon Retirement Information Online Network (ORION) is an integrated set of technology tools used to manage data and processes for over 330,000 member accounts. It is the result of a $45M, 7 year project to modernize many aspects of information technology at PERS (the Public Employees Retirement System). Along with replacing an aging legacy system with enhanced functionality for agency staff, ORION also extends information access to employers, members, and third party administrators. Several new components have improved state operations overall, and revolutionized how the agency conducts business by automating government-to-government, government-to-business, and government-to-citizen transactions. This document describes the Online Member Services (OMS) component of the ORION system and details the benefits provided, significance of the project, and implementation strategy. OMS transformed the way that PERS interacts with its members and dramatically increased the efficiency and effectiveness of agency staff. The ORION project was initiated during a time of great turmoil for the agency, as a major pension reform bill was passed in the 2003 legislative session. The bill created a new program for employees hired after August 28, 2003, and moved all existing members into a new account-based program. Both of these changes added a lot of stress to the information technology systems and operations of an agency already reeling from outdated technology and inadequate system functionality. To address the new plan features, the agency embarked on a system modernization project. Instead of trying to incorporate these new programs into the existing and outdated legacy system, PERS implemented the first phase of ORION which among other things, established a new technology platform that transformed the way the agency interacts with its members, member employers, and business partners. After the initial project implementation, the agency extended the modernization initiative to include the legacy retirement system. The ensuing phases put PERS on a growth path that led from near collapse, to complete revitalization. The agency succeeded in the following activities: replacing the legacy system with a new application and platform; introducing state-of-the-art technologies; and automating virtually all manual processes. These achievements have enabled the agency to better fulfill its mission, which is: We serve the people of Oregon by administering public employee benefit trusts to pay the right person the right benefit at the right time. The vision and goals for ORION were lofty, and in the end, all agency employees had a hand in delivering the new business and technology services. 2
Description of Business Problem The journey from starting a new job to making an informed retirement decision can span 20, 30, or more years. A unique aspect associated with administering a pension system is that the agency has a very long-term relationship with its members and member employers. Today, members making retirement decisions rely heavily on data, transactions, and information that the agency has collected and provided over the course of decades. Because the decision to retire is a key milestone in a person s life, it is imperative that the information that a person has to make that decision is accurate, timely, and reliable; once a person makes the decision to retire, his/her life changes forever. The three major factors that contribute to making a successful retirement decision are: 1) the member s eligibility to retire; 2) the member s ability to retire; and, 3) the member s understanding all of the options. Currently, there are approximately 75,000 Oregon PERS members who are eligible to retire, out of an active workforce of approximately 210,000. Whether any of those eligible to retire will actually decide to retire is directly dependent upon whether they believe they can afford to retire. This is a complex decision for many and requires a lot of data, information, and analysis. The fundamental problem that the agency faced was that the Retirement Information Management System (RIMS), the legacy application, was developed over 25 years ago using COBOL, CICS, IMS, and other mainframe components. Agency staff reported that RIMS provided only 80% of the needed functionality when it was originally delivered, and that the percentage declined steadily as the retirement plan underwent many rapid and significant changes. By 2006, RIMS performed fewer than 50% of the needed retirement calculations and staff required a significant number of manual workarounds in order to accomplish the agency s mission. For example, PERS staff had increasingly been required to perform eligibility and retirement estimate calculations using a combination of RIMS functionality, offline systems (i.e., spreadsheets and separate databases) and manual calculations; driving up operational costs and reducing both efficiency and customer satisfaction. There was no online member access to account specific information, so all member requests had to be fulfilled individually by agency staff. These inefficiencies negatively impacted PERS members during a time in their lives when quick and accurate decisions were needed. In order to ensure a smooth transition into retirement, a member had to start planning many months in advance. Typically, members would submit a written request for a retirement benefit estimate which would initiate a series of activities including data verification/cleanup, a determination of eligibility, interactions with employers to obtain missing data, and finally a calculation of the member s retirement benefit. This process would typically take weeks or months depending on the individual case and staff availability. Using RIMS and other offline systems, agency staff was able to fulfill about 12,000 retirement estimate requests per year leaving more than 1,700 in the queue at any given time. This resulted in significant operational backlogs, error-prone calculations, poor response times, and ultimately frustrated or dissatisfied customers. 3
Business Solution The Oregon Retirement Information Online Network (ORION) is the result of the agency s system modernization effort and included retirement transaction processing capabilities, enterprise system architecture, and modernizing the technology platform. ORION also includes pension administration functionality, electronic workflow, electronic content and contact management, and web-based self-service modules for employers, members, and third party administrators. Overall, ORION has automated many of the benefit administration processes performed by the agency and improves every aspect of the business operations. Ideas that were central to the success of ORION included automating as much as possible and dramatically improving member and stakeholder access to systems, data, and information. The new system was installed in seven years at a cost of $45M with major modules being released into production every 10-16 months starting in January 2004. The last major module, Online Member Services (OMS), was put into production in June 2011. OMS provides PERS members with a web-based portal that gives them access to their individual account information and also lets them perform activities at their convenience. OMS dramatically improves agency operations, data accuracy, and customer service, by providing PERS members with access to their individual data and account information. One example of the efficiencies provided by OMS is the generation of a retirement benefit estimate introduced above. As members become eligible to retire, they often want to calculate their retirement benefit before making a final decision. The OMS online tool allows members to use their specific account information to calculate an estimated retirement benefit, based on various parameters such as effective retirement date, final salary, and leave accruals. Prior to OMS, members submitted written requests to agency staff who would calculate the estimate and send it to the member by mail. Turnaround time was weeks or months depending upon the volume of requests, current backlogs, projected retirement date, and staff availability. Now, with OMS, members receive an instant response and can create as many estimates as they want using different parameters. Using OMS, members completed an average of 12,120 retirement estimates per month in 2012, with a peak of 19,702 estimates completed in the month of May. This represents a ten-fold increase over the annual throughput under the legacy system. The adoption rate of OMS has been rising rapidly from about 50 unique visitors a day after the initial launch, to currently over 1,000. With the increasing OMS adoption rate, PERS is becoming more efficient at providing information and members are reporting greater satisfaction with getting more of what they need when they need it (agency responsiveness), and agency staff are able to focus on higher-level complex tasks. The example provided above is just one of the many features available in the OMS module. Many of these features have an equally important impact on a member s ability to be self-sufficient and on the agency s ability to be more effective. Other features and benefits of OMS include the following: Viewing account information and work history - this feature gives members online access to their demographic information and work history. They can 4
review this data throughout their working career, and help PERS ensure that it is accurate and complete by alerting their employer of any discrepancies. This drastically reduces the processing time needed to calculate retirement benefits when the member decides to retire. Downloading plan materials and forms this feature allows members to have access to all retirement plan documents and includes FAQs to help active members make an informed retirement decision without calling PERS. With 3 tiers and more than 13 different benefit payment options, Oregon PERS is considered to be one of the most complex retirement systems in the nation, and members value the information and resources provided. Submitting questions electronically - this feature lets members research their retirement decisions on their own time. At night or on weekends, members can review their data and retirement options. They can submit questions online for a next business day personalized response, rather than waiting and calling PERS directly. Many members prefer this self-service option. Obtaining payment history and annual statements retirees can use this feature to review detailed benefit payment information and active members can obtain copies of their annual statements. Obtaining copies of IRS Form 1099-R retirees can use this feature to view and print copies of their 1099R tax forms. Submitting change of address requests - retirees and inactive members can submit change of address information online. Processing a withdrawal inactive members can initiate a withdrawal of their benefit. The remaining sections of this document focus on the implementation approach, significance, and key benefits derived from completing the OMS module of ORION. Implementation Approach The foundation upon which ORION (and OMS) is built is a leading pension administration framework. This framework provides the fundamental building blocks for pension administration and is used by several state, county, and local government pension systems. The framework uses Java 2 Enterprise Edition (J2EE), Java, WebSphere, MS-SQL Server, and FileNet for its core technologies. The agency selected a framework instead of a Commercial-Off-The-Shelf (COTS) product, or building the new system from scratch, because it provided the best opportunity for success in the dynamic environment surrounding PERS. The Oregon retirement plan is generally regarded as one of the most complex plans in the country. This fact effectively eliminated most COTS products which are typically used for straight forward retirement systems with standard plan structures. Building the system from scratch was ruled out because the additional time necessary to build a new system, risked putting the agency into larger operational backlogs for a longer period of time. The selection of a system framework however, allowed the agency to get a head start on building many of the fundamental elements of the system, while focusing on the customizations needed to accommodate the retirement plan s complex business rules. 5
It also allowed the agency to use a phased approach, so that modules of the new system could be put into production while others were being developed. The agency partnered with several external consultants for technical expertise and project implementation resources. At its peak, the project was staffed by over 70 external business analysts, developers, and project managers, and over 70 agency staff members, filling roles as stakeholders, process owners, subject matter experts, testers, analysts, developers, technical support staff, and project managers. The size, complexity, and scope of the project necessitated a solid project management approach and effective communication plan. The overall modernization project was managed as a program portfolio that contained multiple sub-projects /components. The program was led by an Executive Sponsor and was guided at the strategic level by a Project Steering Committee (comprising agency division administrators) and at the tactical level, by a Core Project Team (including business and technical managers and staff). Throughout the project, the agency performed quarterly quality assurance reviews to ensure that the project was meeting its intended goals and milestones. At QA reviews, the Project Steering Committee reviewed all findings and implemented process improvements when appropriate. The communication plan included weekly project status meetings which were open to project team members and agency managers. During these meetings, the project managers of sub-projects reported the current status as well as future activities, issues, and potential risks. Other components of the communication plan included an internal newsletter to staff, external newsletters to members, intranet project updates, website updates, project team member visits to division staff meetings, and status meetings to legislative subcommittees. The official rollout of OMS included a notice with instructions in the member newsletter, online help and, phone support to members as needed. OMS has enhanced member access to data and provided for more transparency into agency processes. It has also created a new risk, accessibility, and security profile for the agency. System security under the legacy system limited access to data and information to internal staff. With OMS, a web-based application, access to parts of the system is extended to more than 330,000 members, and is accessible to everyone using the Internet. Access to the system is controlled through a user ID/password combination over an encrypted communication channel. Users self-authenticate and are challenged with several personal questions, before a login ID is issued. Application development followed industry standard secure coding practices (e.g., prevent SQLinjection, cross site scripting, etc.). Constantly vigilant against emerging security threats, PERS performs regular penetration testing and security audits using external security experts. Significance The need for ORION was inevitable and driven primarily by the desire to improve agency effectiveness and customer satisfaction. The agency has seen dramatic improvements in transaction accuracy, timeliness, and customer service levels. For members, the self-service features introduced by OMS provide the dual benefits of giving them more visibility into their retirement information, and more control when 6
making retirement decisions. For agency staff, the functionality now available through OMS relieves them of thousands of manual and labor intensive formulaic transactions, and allows them to focus on higher level activities such as, complex or problem cases. The NASCIO 2013 State CIO Priorities of legacy modernization, budget/cost control strategies, and system security have been addressed throughout this project. In addition, OMS has positioned the agency to handle spikes in retirement volume without hiring additional staff. As mentioned earlier, over 75,000 Oregon PERS members are currently eligible to retire. If a critical event occurs (e.g., a change in economic conditions, state government downsizing, etc.), that triggers a wave of retirement candidates, the agency could potentially be swamped with tens of thousands of retirement applications at once. OMS enables members to proactively plan for retirement more efficiently than ever before. Summary of Benefits In addition to the important features and significant benefits described in earlier sections of this document, the following summarizes additional benefits that have been realized from implementation of the OMS module of ORION: Ten-fold increase in benefit estimate processing capability; Improved data quality; Better member access to plan materials and documents; Established, repeatable processes; Improved turn-around time on member requests; Improved data accuracy; Improved data transparency; Ability to meet transaction spikes with no additional staff; Improved and consistent member services; Improved customer satisfaction; Enhanced government-to-citizen and government-to-government capabilities. Conclusion The development and implementation of the OMS module represents a key milestone in the Oregon PERS mission to pay the right person the right benefit at the right time, and has improved state operations overall. OMS provides tools that empower members to become self-sufficient in directing their own retirement decisions, and allows them to become involved earlier in the planning process. Prior to OMS, many public employees gave little thought to their retirement strategy until the day was near. More importantly, by understanding the options, reviewing and interacting with the retirement data, and planning earlier in their careers, public employees are now better prepared to secure a more financially stable retirement. 7