Consolidation will be the key factor for pension and insurance funds to overcome ongoing demographic pressures, a report by SimCorp StrategyLab has found.

The Pension and insurance funds: demographic pressures on fund returns top industry challenges whitepaper stated that the simultaneous requirements of higher performance, lower risk and more stable cash flows can be met by bigger financial groups that can invest across many different asset classes and perform stable and reliable risk management by acquiring the right asset management system to enable and support this.

The whitepaper, written by Rothschild chair professor of banking and finance at INSEAD, France, Massimo Maasa, evaluated the main points to emerge from group discussions on pension and insurance funds and the challenges facing the sector.

It found an ageing population to be the biggest challenge currently facing pension and insurance funds. Other issues for industry include increased competition, regulatory risk and investment risk.

According to the paper, scale, internationalisation and the right choice of investment management software are key determinants in mitigating risk, controlling costs and promoting growth. An appropriate investment management system that handles assets under management and liabilities was therefore recommended.

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