GROUP PENSIONS

Are corporate group pensions on the rise in Finland?

September 10, 2009

Expected changes in Finnish regulations governing long-term savings may spur an increase in corporate employers offering group pension arrangements to their employees. Profit Software is ready with a tried, tested and fully scalable solution.

In 2008, the size of the non-obligatory pension market in Finland was more than one billion euro, a substantial amount of which was paid through group pension schemes held by companies for their employees. Now, Finnish laws governing long term savings are expected to change, and there are indications that corporate group pension plans will become even more attractive as a result.

Strong performance requirements

Typically, corporate group pension schemes are characterized by defined contribution payment plans, rather than the defined benefit plans of the past. The reason: today’s employees not only want control over their pension savings, they also want flexibility as to when and how much they pay. And if they change employers, they want the option of being able to take their savings with them.

This flexibility may pose something of a challenge for insurers, who need to implement products that support the management of multiple individual schemes within a group. While this does not necessarily increase mathematical complexity, it can place heavy performance requirements on IT systems, particularly if the group is made up of a large number of individuals.

Our proven solution

Recognizing this challenge, Profit Software has developed, refined and tested a model to fully support the flexibility of tens of thousands of individual policies within a defined contribution group pension scheme. Our model also enables insurers offering traditional defined benefit pension arrangements to easily convert portfolios to defined contribution plans.

To date, Profit Software has implemented this group pension plan in three different countries, and was recently also asked to test the system as part of a large project in Norway. The test required the application of our model to a group of some 70,000 people, yielding results that were outstanding in terms of both performance and scalability. Read more about the test.

Having proven the performance of our system on such a large scale, Profit Software is now ready to help insurance companies in Finland develop their group pension offerings as regulations change and the market grows.

Contact us to discuss how our group pension solutions can benefit your business.