Retirements in 2025: Aligning Business Priorities and Technology Innovation

The U.S. retirement industry, now exceeding $40 trillion in assets (as of June 30, 2024), remains the world's largest. It supports over 75 million participants, providing a vital financial foundation for millions of Americans. This scale is the result of decades of strategic growth and business evolution. Retirement service providers have grown through mergers, acquisitions, and business innovation across products, channels, operations, and more.

While these strategies have resulted in remarkable growth, there are four key drivers that organizations need to consider and step back to reassess the sustainability of their current approach:

• A motley of distinct legacy systems – Mergers and acquisitions (M&As) have resulted in providers managing multiple legacy systems. These often-siloed systems, in turn, resulted in increasing technology debt, limited sharing because of fragmented data, and slow innovation due to the need for extensive manual coding.
• Need for speed to market – Providers need modern core systems to quickly launch new products and maintain a competitive edge. Furthermore, traditional systems also lack the flexibility for seamless mobile and web experiences, frustrating users with outdated interfaces and limited self-service options.
• Regulatory complexity – Compliance rules have and continue to evolve frequently, while rigid legacy platforms make adaptation difficult without disrupting operations.
• Cybersecurity risks – With advanced cyber threats evolving faster than many organizations can keep up with, older applications lack the ability to implement advanced security protocols, making them more vulnerable to fraud and data breaches.

The imperative is clear: Legacy systems must be “retired” to make way for agile, technology-driven services. To thrive, providers need to balance stability, innovation, and seamless digital experiences without compromising reliability or data integrity.

The modernization of retirement systems through technology aims to make retirement planning more efficient, flexible, and inclusive. By leveraging fintech, improving digital participation, and enhancing financial literacy, the U.S. is adapting to a future where retirement security is more accessible and sustainable. Technology plays a pivotal role in making retirement systems fit for the modern workforce and an aging population.

Pathways to Retirement Systems Modernization

Retirement service providers have several modernization options, each with its own trade-offs:

• Full System Overhaul – Completely replacing legacy systems with modern solutions. While effective, this approach is costly, time-consuming, and risk-heavy.
• Hybrid Modernization – Retaining critical legacy components while upgrading selected functions with modern alternatives. This balances cost, flexibility, and efficiency.
• Maintaining Parallel Systems – Running old and new systems simultaneously. While this approach ensures business continuity, it also risks inefficiencies and data inconsistencies.

Many retirement service providers are already in the process of upgrading their IT infrastructure, yet the urgency for modernization has never been greater. Delaying this transformation means risking market share and customer trust.

Rather than a one-size-fits-all approach, leading firms are partnering with strategic system integrators (SIs) to:

• Unify technology landscapes post-merger, ensuring data continuity and interoperability.
• Deploy cloud-based solutions that improve security, compliance, and real-time reporting.
• Enhance member engagement with AI-driven personalization and omnichannel support.

Stories of Successful Modernization

Here are some real-world examples of retirement providers reducing technical debt through modernization:

• Tech Mahindra & Australian Superannuation Provider – Tech Mahindra partnered with a leading Australian superannuation provider to transform pension administration, reducing platform ownership costs by 40%.
• Leading U.S. Retirement Provider – A major U.S. retirement provider is investing in modernizing record-keeping operations. This initiative integrates AI-driven insights, automation, and cloud-based solutions, improving compliance and digital experiences.
• Dual-System Strategy for Seamless Transition – Another retirement provider is implementing a hybrid approach, integrating legacy and modern platforms under a unified digital layer. This ensures stability while enhancing participant experience and operational efficiency.

Conclusion

Retirement providers are at a pivotal point where technology presents new growth opportunities. Modern platforms enable faster product innovation, seamless regulatory compliance, and improved digital-first member experiences. Cloud-based solutions and AI-driven analytics are helping providers introduce flexible retirement plans, real-time financial insights, and automated compliance workflows.

For example, digital onboarding and self-service portals reduce administrative burdens while improving user experience. Intelligent automation can streamline post-M&A system integrations, eliminating data silos and ensuring operational continuity.

Rather than merely keeping pace with change, providers that invest in modernization today will shape the future of retirement services. They will offer personalized, agile, and secure solutions that meet evolving member expectations.

Tech Mahindra is a strategic partner with deep industry expertise, data-driven frameworks, and Gen AI capabilities. Retirement service providers can now accelerate transformation and deliver exceptional value with modular and scalable solutions.