Source: State Street
European pension funds are struggling to meet the data challenges imposed by increasing governance and regulatory requirements, more complex investment strategies and greater demands for risk control, according to a survey commissioned by State Street Corporation (NYSE: STT) and conducted by the Economist Intelligence Unit (EIU).
The demand for more frequent and granular data has increased exponentially amid the renewed focus on governance and transparency over the past five years for all pension schemes. The research revealed that nearly 73 percent of European pension schemes cite demands from internal governance and risk management functions as a challenge and 87 percent believe governance demands will escalate over the next five years.
Ian Hamilton, head of asset owner sales for State Street Global Services said, "At a country level, local regulators increasingly require more frequent and more detailed reporting. In addition, the prospect of overarching regulatory initiatives affecting pension funds at a European level, such as the potential for Solvency II-style reporting of asset data, could create a significant additional burden. Not surprisingly, these requirements emerge as a key challenge in our 2012 European pension study. It is clear that external support and solutions will play a growing role."
Of the DB respondents, the EIU survey revealed the following:
• Only 65% agree that they have access to portfolio data that enables them to fulfil their regulatory commitments.
• Less than half (44%) feel the data helps them identify investment opportunities and only 61% say it allows them to understand their total risk exposure.
• Only two out of five (42%) are confident their data provides full insight into their investment costs.
• Only 60% agree that they have access to portfolio investment data that is accurate.
The survey received 150 responses from defined benefit and defined contribution pension schemes in Germany, Italy, Netherlands, Switzerland, UK and the Nordics.