Safeguarding pension assets with a native front-to-back core platform
SOKA-BAU is a non-profit umbrella organization, which manages a leave fund scheme and an occupational pension fund for the construction sector. Both institutions protect holiday entitlements for domestic and seconded blue-collar workers, manage occupational pension funds and co-fund the vocational training for workers and companies in the construction sector. SOKA-BAU provides sector-specific solutions for about 80,000 companies, 1,000,000 blue-collar workers and 360,000 retirees.
The business case: In search of a scalable, cross-asset class solution
In pursuit of higher returns for its future retirees, SOKA-BAU was challenged by several limitations with their existing system architecture. Their incumbent solutions could only handle a limited set of financial products, restricting the company from expanding their portfolio to asset classes with a stronger risk-return profile. Likewise, the use of multiple systems running on different databases had led to inefficiencies in its day-to-day operations and required a high degree of manual intervention.
SOKA-BAU had been using very complex risk calculations for several years, most of which were done using in-house developed tools based on separate databases, which led to numerous reconciliation issues. Secondly, as risk figures were shared with departments that did not have access to the in-house developed tools, the company could not apply efficient portfolio look-through to understand its true exposures.
Therefore, SOKA-BAU saw the necessity to consolidate their investment operations onto one single system architecture, from the booking of the deals through to risk measurement and the supervision of compliance limits, to the fulfillment of internal and external reporting obligations. The company’s four incumbent systems were replaced with SimCorp Dimension through this consolidation process.
The solution: A scalable front-to-back investment platform with true multi-asset class coverage
In December 2017 SOKA-BAU signed the agreement to acquire SimCorp Dimension across their entire front-to-back office with the goal of simplifying and consolidating their system architecture and to create an operationally efficient and integrated investment management setup.
A key requirement in their selection of SimCorp Dimension was a need for a multi-asset class solution to manage their entire range of investments across front-to-back, from portfolio management through to accounting. None of the other solutions that they investigated were able to offer the same comprehensive coverage and tightly integrated core platform across the entire investment lifecycle. In just one year SOKA-BAU went live with SimCorp Dimension across their front-to-back office operations.
The business benefits: One investment truth for risk management excellence
SimCorp Dimension provides SOKA-BAU with a transparent and single enterprise view of its entire investment lifecycle, replacing several disparate systems and applications. This means that everything starting with the preliminary trade checks through to the booking of the deals to the P&L and risk analyses is now accessible in one system and based on the same accurate, timely and complete data.
Through consolidation of current systems and a simplified IT architecture, SimCorp Dimension helped us to achieve automation while reducing operational costs. This will allow us to serve our customers more efficiently.
SimCorp Dimension provides SOKA-BAU with a transparent investment process based on “one investment truth” that is easily accessible across departments. This has enabled the company to achieve its business outcome: greater automation, scalability, and flexibility to adapt to new, complex market conditions, while reducing operational costs. For example, SOKA-BAU is now able to produce its internal market risk reports adhoc as market events dictate, instead of waiting for the monthly report.
In 2020/2021, the firm also was awarded Best Risk Management by the media publication, portfolio institutionell, which underscored the value of the extensive risk functionality in SimCorp Dimension. Transparent risk calculations provide a better understanding of the risk models and sensitivities applied. By providing a real-time golden copy of all its positions, powered by the system’s centralized Investment Book of Record (IBOR), the solution delivers a superior understanding of exposures and enables more accurate investment forecasting, ultimately safeguarding the pension assets of its members.
The implementation of the SimCorp Dimension solution formed the basis for a stable and flexible risk-based approach to managing our assets.
Head of Asset Management, SOKA-BAU
As SOKA-BAU expands their environmental, social, and governance (ESG) investing they can integrate ESG data into SimCorp Dimension to meet internal and, in the future, external reporting requirements. Updates to SimCorp Dimension will include ESG and SFDR modules to help future-proof SOKA-BAU’s system architecture to support the onboarding of new investment strategies and meet regulatory standards.
Quick Facts (2021)
AUM: EUR 13.7 bn
Headquarters: Wiesbaden and Rüsselsheim, Germany
Employees: Approx. 1,000
SOKA-BAU is the common umbrella brand for ‘Urlaubs- und Lohnausgleichskasse der Bauwirtschaft’ (ULAK) and ‘Zusatzversorgungskasse des Baugewerbes AG’ (ZVK) with approximately 80,000 companies from the construction industry in its portfolio. Both ULAK and ZVK are institutions jointly managed by the social partners of the construction industry. In particular, the holiday scheme is an essential part of the construction law. As a service provider, the company takes care of the holiday scheme, the additional pensions in the construction industry and the financing of vocational training.