Public sector pension funds are the latest target in a trend of rising scrutiny of government and other institutions that serve Canadians. Are you able to ensure transparency and reduce reputational risks within your IT organization?
“As more Canadians retire, pressure is mounting on our largest public-sector pensions to take on more risk.” This has led to diversification of their investment portfolio to achieve higher rates of returns. Historically, member and employer contributions were sufficient to meet the obligation to retirees, but with longevity and the shift of retiree-to-employee contribution ratios, this is no longer sustainable. “In the 1980s and 1990s, economic challenges and demographic pressures made it clear that contributions from current workers alone would no longer be enough to provide a secure retirement income for pensioners.” The Toronto Star asks, “Are Canada’s largest pensions putting your retirement at risk?”
Is your IT organization optimized to support the business?
Risk Management
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Canada’s largest public-sector pension funds have become global financial players,” the Star continues. With global expansion, comes increased risk and vulnerability. To address this, begin by assessing your security risk and align risk tolerance with the business. Securing and protecting your data is critical as cybercriminals continue to evolve with new ways to infiltrate organizations by exponentially expanding attacks. IT needs to have a strong security program in place to transform security events while maintaining the overall risk posture of the organization.
Build an IT security program to focus on security prevention, detection, analysis, and response processes that address the increasing sophistication of cyberthreats while guiding continuous improvement. By combining security risk management components into one program, you can align business and IT risk tolerance. This will enable you to target the largest risks in the organization, elevate the IT security program, prioritize risk remediation, and support the budget process for allocation of funds and resources.
Know Your Budget
Pension plans are being criticized for the “investment board executive pay ... getting out of control.” An IT organization’s ability to provide transparency into their expenses increases the confidence of the business and other stakeholders. Change the perception of IT from an expense-based function to a service provider and business enabler. Many public-sector IT departments already run lean, struggling to keep pace with never-ending business demands. IT leadership must make difficult staff recruitment and allocation decisions to meet business needs. How others in your industry are staffing IT functions is a good general indicator of where you should be looking to augment from a strict headcount perspective, but this all comes to nothing if the teams you have aren’t effective. Leverage our IT Staffing Benchmarking Diagnostic to assess your current state and start improving your IT team’s functional allocation and overall effectiveness.
Digital Transformation
In 2019 to 2020, Employment and Social Development Canada delivered Canada Pension Plan/Old Age Security (including disability) benefits to almost 8 million Canadians monthly. According to the 2021 Canadian Census released by Statistics Canada in April 2022, more people are retiring than entering the workforce, and that gap will only grow in the coming years. Roughly 21.8% of the population is close to retirement (between the ages of 55 to 64), an all-time high in the history of Canadian censuses. As a result, more and more Canadians will be collecting pensions, and governments will be pressed to provide modern digital services to ensure Canadians get the benefits they deserve in an effective and timely manner. Now more than ever, governments need to tackle their IT debt to respond.
In a digital world where smartphones are ubiquitous, Canadians expect seamless services and experiences how, when, and where they want them. Public pension agencies must keep pace with rising expectations. This includes:
- Enabling all clients to use self-service in a way that is easy and intuitive.
- Single sign-in with a “tell us once” principle.
- Digital identity with enhanced security features.
- Digital assistance.
- Better protection against fraud and cyberthreats.
- Increased delivery flexibility, enabling Service Canada to deliver more services on behalf of other departments (e.g. Digital ID, Digital Services, Call Centre Support).
- Improved multichannel integration – no wrong door.
The pressure’s on to give your members the same personalized services, multichannel choices and ultra-convenience they expect when shopping, banking, and managing everyday life online. At the same time, you need to balance fund sustainability with benefit adequacy. These are tough challenges. But while they are driving demand, they are also opening opportunities for a new type of retirement experience. Review our executive brief for Sustain and Grow the Maturity of Innovation in Your Enterprise to find out why you should formalize processes to improve your innovation program and define your digital business strategy.
Vendor Management
Governments need to accelerate the procurement process and remain unbiased in their vendor selection while ensuring they acquire the right products to meet the business needs. Leverage our five-step process for rapid application selection, as selecting the right enterprise application is crucial for both IT and business success. However, equally important is your ability to proactively identify and mitigate vendor risk and effectively manage external resources to ensure you are getting the most value from your vendor with a vendor management initiative. Speaking with our analysts can enhance your vendor management process and help you make better decisions, accelerate selection, reduce risk, and save money.
Business-Aligned IT Strategy
Our research shows success depends on IT initiatives being clearly aligned to business goals, promoting IT excellence, and driving technology innovation. IT departments that have not developed IT strategies experience issues with alignment, organization, and prioritization. Through our blueprint Build a Business-Aligned IT Strategy you will learn about the ecosystem factors that are impacting the public sector and the inherent opportunities. Leveraging the output from the blueprint exercise, you will be able to create a prioritized list of initiatives and descriptions to consider for inclusion in your IT strategic plan.
Environmental, Social, and Governance
Be prepared and informed on predictions of ESG performance. “The big eight pension funds are facing increasing calls to demonstrate responsible investing practices when it comes to the environment and social issues.” We estimate that before 2025, regulators will mandate companies to add their ESG performance results (according to rules yet to be written) to their periodic financial performance results. By so doing, and thanks to IT, the manner in which a company’s market capitalization value is calculated will change forever. So will the importance of CIOs and their staffs. While each fund has committed to reducing their carbon footprint, “disclosure on such investments varies significantly across the funds and the definitions provided are ‘sorely lacking in detail.’”
Our Take
Governments and other public sector institutions will continue to be scrutinized. However, IT organizations have an opportunity to shift the conversation by proactively providing transparency, aligning business-IT risk tolerance, and focusing on value-driven business outcomes through innovation.
Want to Know More?
Click on any of the links below to book a call with an analyst on the topic.
- IT Security Diagnostic Program
- Combine Security Risk Management Components Into One Program
- State/Provincial Government IT Staffing Benchmarking Report
- Sustain and Grow the Maturity of Innovation in Your Enterprise
- Define Your Digital Business Strategy
- Rapid Application Selection on SoftwareReviews
- Proactively Identify and Mitigate Vendor Risk
- Jump Start Your Vendor Management Initiative
- Build a Business-Aligned IT Strategy
- ESG Disclosures: How Will We Record Status Updates on the World We Are Creating?