Technology to manage pension scheme risk is a priority

Pension scheme and insurance risk managers believe that heightening pressure from The Pensions Regulator (TPR) and new obligations placed on insurers provides an opportunity to upgrade cross-organisation risk technology, according to research conducted by Clear Path Analysis.

The survey Risk Technology for Pension Schemes and Insurers showed that 72% of insurance groups and 61% of pension managers had started preparing for the TPR’s rules and forthcoming requirements on solvency, designed to better reflect the risks faced by insurers.

Out of the 21 insurance risk and operation managers and 22 pension scheme managers surveyed, 71% cited cleaning legacy data for optimum accuracy as a significant concern. Monitoring changes in interest, inflation and counter-party risk was also a challenge for 63% of respondents.

More than half of respondents (56%) said that ensuring risk is managed and monitored across all relevant business areas was also a concern, while 39% stated that looking at the investment performance of external managers was a priority, while 29% were interested in gaining as near to real time transparency on risks faced as possible.

The majority (74%) of respondents stated that rationalising and justifying the need for new technology was one of the most significant challenges they faced in identifying and integrating it. More than half (53%) said that identifying the appropriate technology for their specific objectives was significant challenge, while 47% said engaging staff and external providers to use the new systems could be difficult.

Meanwhile, only 35% said it was highly important for them to be able to fulfil the responsibilities of their role, 47% said they felt it was the role of their actuary or consultant to understand on their behalf and advise appropriately. Just 11% felt it was a joint responsibility between the consultant and themselves and 9% were undecided about the importance of risk technology to their organisation.

Noel Hillmann, managing director of Clear Path Analysis and publisher of the report said: “It is evident that the drive by regulators to implement Solvency II and record keeping legislation is providing the impetus for pension scheme and insurance organisations to look at how they can better utilise technology in their operations. Due to this we have been hearing increasingly about a drive within schemes and insurers to better understand and utilise risk technologies that are available”

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