09.28.2011

Euro Pensions Call for Integration

09.28.2011
Terry Flanagan

German pension utilizes system integration to keep up with FinReg.

Investment professionals at the top of Europe’s prominent public pension funds are utilizing technology vendors to stay abreast of state and federal regulations.

Most recently, a German occupational pension fund with north of €6 billion under management has selected SimCorp Dimension, the flagship software solution product of SimCorp, as its investment management system. SimCorp Dimension will be used to manage data for portfolio management, as well as oversee accounting for the fund in an integrated platform.

The significance of SimCorp’s new liaison with an undisclosed German pension fund signals the pension industry’s growing concern to stay abreast of European financial regulation.

“Overall, firms need to be looking at the strategic, tactical, systemic and operational impact of both current and proposed regulation and implementing flexible, scalable infrastructures that can support regulatory change,” said Dr. Ralf Schmücker, managing director of SimCorp Central Europe.

Schmucker referred to several of new regulations placed on European pensions, such as in Germany specifically, “‘Versorgungswerk’, a German legal framework for specific pension institutions. These funds have to follow local German state regulations, similar to the BaFin requirements for insurance firms.”

BaFin, translated, is an overhaul umbrella regulatory ruling that brought the supervision of banks and financial services providers, insurance undertakings and securities trading under one roof.

Critical to the pension fund’s choice of SimCorp Dimension was the system’s comprehensive range of functionality as well as its ability to provide a transparent view of externally managed funds, noted the firm. Schmucker noted that several of European pension plans are in the product’s user base.

For SimCorp, a leading cause for targeting the pension industry is the changing demographics spurring the growing and changing needs of the pensions’ end beneficiaries.

“In Europe, there are a number of industry and regulatory pressures affecting the pension industry. Changing demographics, for example, with an aging population, mean pension and insurance firms need to provide consistent returns even in the current low-interest environment,” said Schmucker.

“Regulatory bodies are demanding greater transparency and are pushing firms to demonstrate where the achieved performance is coming from and what risks were taken to achieve those returns.”

The firm is confident that SimCorp Dimension will “give the flexibility to support the firm’s current and future needs by also providing an optimal basis for the control and reporting of all managed funds,” said Schmucker.

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