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The two-pot retirement system divides retirement savings into two pots: one accessible during the working years and the other preserved for post-retirement.

The first pot, known as the "accessible pot," allows individuals to withdraw a portion of their retirement savings during their working years for emergencies or other needs. This provides immediate financial flexibility, crucial during unexpected expenses or economic uncertainty.

The second pot, referred to as the "preservation pot," is designed to ensure long-term financial security by safeguarding funds for retirement. This pot remains untouchable until retirement, ensuring that individuals have a stable income source in their later years. This system offers individuals flexibility and security over the long term.

As the deadline for implementing the two-pot retirement system looms, it's crucial for organizations to assess their readiness. Are your current systems equipped to handle the complexities of this structure? Do you have the necessary technological infrastructure for compliance and efficiency? These questions underscore the urgent need for modernization.  

Organizational readiness and system
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Two pots retirement is an excellent indicator of how quickly the business landscape can change, whether it be legislative or technological. Businesses must also monitor the competitive landscape to maintain market share, as all these variables are evolving faster than ever.

The typical challenge with any of these is dealing with not just legacy technology but ensuring the holistic perspective is fragmented among disparate systems and processes, causing delays in implementation.

Maintaining legacy technology can be a drain on IT budgets, with the insurance industry estimating that it consumes as much as 70-80% of these budgets. This leaves little room for innovation and modernization, underscoring the critical need for businesses to invest in technology modernization to stay competitive and meet evolving market expectations​

Insurance businesses must start modernizing their legacy technology to meet modern standards to lower costs and reallocate budgets to innovation and value creation.

While the modernization imperative may seem daunting, it's important for organizations to remember that success is within reach. By learning from the challenges others have faced and implementing the right strategies, you can increase your chances of long-term success in your modernization efforts.

Challenges with Modernization
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Modernization is often impeded by not just technology systems but a combination of factors listed below:

1. Technology and Architecture Lock-In

Complex and entangled architecture and legacy systems make minor changes risky and complicated. Those changes are often coordinated across business units and lines of responsibility.

2. Misaligned Talent and Structure

Poor alignment of skills and organizational setup leads to frustration and inefficiency. It is creating friction-oriented teams and structures that lead to delivery inefficiency.

3. Lack of Cultural Change

Modern working methods include agile, Lean delivery teams, DevOps, and Automation. Business leaders must invest in and support these new methods to maintain progress, leading to progressive team behaviors.

4. Transformation Fatigue

Innovation initiatives that are not fully aligned with the business outcomes create delivery turbulence by either long or infrequent updates in the pace of engineering teams, which could cause burnout or make teams despondent.

5. Innovation Without Impact

Efforts that look innovative but don't deliver natural business value waste resources.

Together, these failures show us that legacy modernization shouldn't be approached simply as a technology exercise. Instead, organizations must think about modernization primarily regarding the customer value, risk and business benefit they want efforts to deliver.
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Conclusion

Eblocks can assist businesses in conducting thorough readiness assessments, identifying gaps in their current modernization effort, and developing a strategic plan to address these gaps.

For more information on how Eblocks can assist businesses in embracing cloud-driven modernization, click here

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