Still Changing the Retirement Distributions Industry After 25 Years
Twenty-five years ago, 30 people from the retirement plan TPA community got together for a weekend to talk openly about what we liked and didn’t like about our industry. We also shared our thoughts on how the new competition coming into the industry was affecting our world.
As the weekend drew to a close, we asked everyone to list their top three issues in order. All 30 of us ranked distributions – the process of making benefit payments to plan participants who were retiring or terminating from a plan – as the #1 issue. None of us could put a finger on what we disliked about the process and why. We all just knew we didn’t like it.
We agreed to hire a process improvement consulting firm to evaluate six of our companies and make recommendations to improve distribution efficiencies. Rather than implement their suggestions piecemeal, their feedback convinced us of the need to create a company that would focus solely on retirement plan distributions. Shortly thereafter, PenChecks, Inc., was born.
From New Kid on the Block to Industry Leader
Initially, PenChecks focused on one primary service – processing benefit distributions for plans that weren’t on someone’s record-keeping platform. Many plan sponsors and TPAs struggled to efficiently handle the distributions, tax withholding, and all that goes along with retirement distributions, and they were happy to let us do it. The early years were tough; there were times we didn’t know if we would survive. But we kept at it, and found we could operate profitably in this unique niche.
Since then we have developed many new services, including recurring benefit payments, Automatic Rollover and Missing Participant IRAs, uncashed check solutions, Abandoned Plan/Qualified Termination Administration (QTA) services, and other related services. As our menu of services has grown, so has the company.
In our first year, we processed $500,000 in benefit payments. In 2018, we processed more than $3.5 billion. We started out with a small handful of employees, and now have more than 50. We’re known throughout the industry for our innovative payment processing solutions and fast, friendly service. And we are routinely called upon by the Department of Labor to provide input on issues affecting retirement plan distributions. I am very proud of these accomplishments. Yet, in some ways it feels like PenChecks is just getting started in terms of what we can do to help America’s workers save for their retirements.
What lies ahead for the next 25 years?
We will continue to expand and diversify our services to keep up with the rapid pace of change in our industry. Our goal is not just to meet the evolving needs of our clients, it’s to anticipate them and create proactive solutions that help you stay one step ahead rather than always trying to catch up. We were one of the first to highlight the challenging issue of uncashed pension checks, and we were the first to offer a process for managing them in a way that protects the plan sponsor and the participant. It’s hard to say what our industry will look like 10, 20 or 25 years from now. But we will always strive to get there first with the right products and services at the right time.
PenChecks is experiencing internal changes as well. For 25 years, I have been the driving force behind this business. Seven years ago I began looking ahead to the day when I would transfer the mantle of responsibility to the next generation. That set in motion the development of a succession plan and the creation of a highly qualified management team to lead PenChecks into the future. It took some time to get the right people in the right levels in place. As a result, we now have an extraordinary management team that is quite capable of leading this company for the next 25 years in our always changing, highly-regulated industry.
PenChecks also benefits from continuity of ownership that helps us serve our clients better in many ways. First and foremost, it helps us attract highly talented people who want to be part of a company that’s going places. It also encourages them to stay with us for the long-term. Over time, they get to know and truly care about the people we serve. Our clients love the fact that they don’t talk to a different person every time they call us.
Stable ownership also means less bureaucracy and faster decision making – a critical capability in our fast-moving industry. Perhaps most important, it has kept us focused on who we are, what we do, and why we do it. From day one, our mission hasn’t changed, our values haven’t changed, and our culture hasn’t changed. Twenty-five years later, we’re still all about making life easier for our clients and their clients and plan participants.
I would be remiss if I didn’t acknowledge the tremendous contributions our employees have made over the years. Their passion and dedication to solving problems and making life easier for our clients is the foundation of our success. As long as I have an active role in this company I will make sure we never forget it. I have always believed that if we take good care of our employees, they will take good care of our clients. For 25 years our hard-working employees have proven that to be true.
In closing, I want to thank all our clients for your trust in our ability to serve your retirement plan distribution needs. Helping America’s workers save for retirement is a noble profession, and we can all take pride in being part of it.
Peter Preovolos, Chairman & CEO PenChecks Inc.