Make more intelligent use of control framework in pension transition

The transition to the new pension system involves a data and IT transition, the implementation risks of which must be appropriately identified and made manageable. This can be done smartly and efficiently if the transition is integral to the internal control framework. This does require tight control and extra implementation power.

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Operational risks and DNB recommendations

While financial risks are tightly regulated, operational risks are a concern. DNB reports show that risks remain stable in absolute terms. On the other hand, a risk is identified in data quality and IT process transformation. DNB has identified areas for improvement, especially regarding the speed of processing risk findings from the risk management and internal audit functions. From this, we can conclude that there is no need to be in the dark: a clear path has been laid out with recommendations from the regulator. However, it must be followed, and preferably as soon as possible. The pension transition involves a change which is so comprehensive that one needs to take it up in a coordinated way. It is a programme that will take several years and should be managed as such. It involves redesigning the organisation in terms of services and IT and control systems.

Maintaining control

"Boarding up" millions of pensions while renewing full functionality requires the utmost from the pension industry. Pension funds and pension administration organisations must remain in control during this process. This places high demands on internal risk management. By making the transition an integral part of the internal control framework, the pension sector can be demonstrably in control while taking a necessary efficiency step.

Avoiding miscommunication

Adjustments will have to be made to the IT systems of these frameworks. A complicating factor is that there needs to be more communication between the first line (the people working on the change) and the second line (the independent control departments). These people must speak each other's language to deploy the control framework for transition efficiently. Since the second line has a controlling role, the first line must set the direction and make numerous policy and strategic choices.

Competitive advantage through more efficient systems

In-house controllers and risk managers play an essential role in the industry. They know about hedging risks and can determine whether this is done adequately within the insurer operation, which is a primary collective value transfer. With their help, designing a well-controlled, reproducible system is possible. This benefits efficiency and can be used for multiple clients rather than having to be restarted at each pension fund. With a tight control framework, a competitive advantage can thus be gained.

We have the right expertise and experience

More time is needed to manage this complex process. It is wise to engage someone who speaks the language of the different blood groups and knows how to connect them. Boer & Croon has in-house professionals who can do this and play a complementary role by identifying the risks and implementing the necessary control measures.


Want to know what Boer & Croon can do for your organisation? Contact Kees-Jan van Vliet (partner Finance & Technology).