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Cognizant 20-20 Insights

Belgiums SIGEDIS Compliance Program:


Doing It the Smart Way
Pension providers must seek efficient solutions for compliance to
save costs and free up resources to pursue strategic initiatives.

Executive Summary pension providers for second pillar pensions


To bring in transparency and protect the rights and bring transparency in the corresponding
of the insured, the Belgian government created a pension benefit statements sent to employees. It
legal body, SIGEDIS, to regulate employer-funded mandates that pension providers submit various
pensions. Typically, SIGEDIS mandates change on types of information to prove compliance and to
compliance declarations on a yearly milestone feed in information to the database used to create
basis. All pension providers have to submit the employee pension benefit statements. This
mandated declarations to SIGEDIS, for which they translates to a large-scale IT program for pension
undertake multiyear legal IT projects to create providers to manage the data.
the declarations.
The Belgian pension system is based on three
The life insurance business is shrinking globally, pillars. The first pillar is the state pension financed
and insurance companies face tremendous by social security contributions and managed
pressure to reduce costs and invest more on by public bodies. The second pillar comprises
strategic initiatives to increase revenue. A supplementary pensions provided by employers
multiyear compliancy program such as SIGEDIS or sectors to their employees. The third pillar
consumes most of the IT budget, leaving little for includes the additional pension programs that
strategic initiatives. individuals can sign up for on their own. The
state pension tends to be insufficient for indi-
This white paper focuses on efficient ways to viduals post-retirement needs. This has made
manage compliance so as to achieve a balance the second pillar popular; the tax benefit it offers
between legacy and strategic initiatives. With an has made it even more attractive. Typically, it is
efficient solution, and effective use of solution part of the employees remuneration package.
accelerators, a 20% to 30% reduction in IT cost is Before SIGEDIS came into effect, it was difficult
possible for a SIGEDIS compliance program. to retrieve a pension benefit statement for an
employee since there was no centralized view.
Introduction to SIGEDIS Employees would get multiple statements and
Sociale Individuele Gegevens-Donnes Individu- found it difficult to assess their overall pension
elles Sociales (SIGEDIS) is a legal body to regulate benefits (see Figure 1, next page).

cognizant 20-20 insights | march 2017


Pension Benefit Statement Scenario Pre-SIGEDIS

Be
ne
?
fitS Benefit Statement
tat
em
Ben en
efit t
Stat

?
ement

Benefit Statement

t
men
tate
fit S

?
e
Ben

Be
ne
fit
Sta
tem
Ben en
efit t
Stat

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eme
nt

Benefit Statement

Benefit Statement
t
temen
Sta
efit
Ben

Figure 1
Source: www.sigedis.be

The Belgian government decided to create a supplementary pensions database in 2006 to collect
information within Belgium and overseas for salaried employees, self-employed individuals and civil
servants. The supplementary pensions database (DB2P) became operational on Jan. 1, 2011, with the
aim of overseeing the tax and social security legislation on the second pillar. The database enables a
consolidated view of an individuals pension and can be used to verify compliance with laws such as the
Loi sur les pensions complmentaires (LPC), Loi sur les pensions complmentaires pour indpendants
(LPCI) or the 80% rule. It also brings transparency to supplementary pensions, providing a consolidated
view of pension status via the www.mypension.be portal. Supplementary pensions are very important in
the European context given the aging population. The database also provides accurate statistics on the
second pillar, allowing individuals to better manage their post-retirement financial planning.

Pension Benefit Statement Scenario Post-SIGEDIS

Benefit Statement

State Finance

Figure 2
Source: www.sigedis.be

cognizant 20-20 insights 2


A nonprofit organization, SIGEDIS was mandated to receive declarations from all second pillar pension
providers to maintain the DB2P. These declarations include the type of pension commitment (group
insurance, sector plan, etc.), the premiums paid by the employer, the pension fees of the insured, etc.

Overview of SIGEDIS and DB2P


SIGEDIS & Account State Declaration

Stores social data of individuals and ensures that public


SIGEDIS institutions can use this data.
Sociale Individuele Gegevens Electronic archiving of employment agreement and
Donnes Individuelles Sociales document.
Has maintained DB2P since 2011.

Provides statistical artifact for planning and decision-making.


Employers and companies can consult their data.
DB2P Better control and transparency of supplementary
Data Bank for 2nd Pillar pension/retirement benefits.
Since 2016, beneficiaries can view their supplementary
pension data.

Figure 3
Source: www.sigedis.be

There are several events that can trigger SIGEDIS declarations (see Figure 4).

SIGEDIS Declaration Events

Create New Group Insurance

Modify Group Insurance

Renewal of Insured

Departure of Insured

Out-Transfer of Insured
Declarations Events
Out-Transfer of Employer

In-Transfer of Insured

In-Transfer of Employer

Employer Premium Contribution

Insuree Premium Contribution

Figure 4
Source: www.sigedis.be

For all the events listed in the figure, declarations need to be sent to SIGEDIS. Insurance companies that
offer second pillar pensions therefore need to adapt their IT applications to capture these events and
then create corresponding declarations for SIGEDIS.

cognizant 20-20 insights 3


See Figure 5 for an illustration of how a typical declaration works.

How a Declaration Works

Pension Providers SIGEDIS


Create Regulation Business Process

Regulation

Employer

Create New Employer Information Data Declaration Refusal File File Declaration Regulation
Regulation Agreement Extractions Validation Generation Validations Traceability Security Expedition Declaration

Regulation
Document

Instauration
Procedure File Exchange History

Errors

Figure 5

Figure 6 provides an overview of the interactions between different parties involved in a SIGEDIS decla-
ration. It is a complex compliance project that demands deep domain understanding.

Interactions Between Different Parties Involved in a SIGEDIS Declaration


Consultation of DB2P www.mypension.be

Social Employer Insured Dormant(s)


Security
Company
Administration Transferred
Unions

Rel. Employers Relation Insured


FSMA
Brokers Pension Institutions

Operations
Fed. Admin
Finance

DB2P

ONSS ONP SIGEDIS INAMI INASTI

Figure 6

cognizant 20-20 insights 4


Several applicable laws, and the different types of pension, further complicate the calculation of amounts
to be submitted to SIGEDIS (see Figure 7).

Different Types of Pension Contributions


Pension System with SIGEDIS Applicability
80% Rule

Individual Individual Enterprise


Pension Plan (EIP) Pension Plan (EIP) Pension (ADE)

Individual
Group Group
Pension Plan (EIP) Complementary
Pension Plan Pension Plan
Individual Pension
Legal Pension
Group Saving (PLCI)
Sectoral Sectoral
Pension Plan
Pension Plan Pension Plan
Complementary
Individual Pension
Saving (PLCI)
Legal Pension Legal Pension

Legal Pension Legal Pension

Statutory Contractors Salaried Business Head Physical


CXO Person

Public Private Independents

Figure 7

This requires a complex multiyear IT program to create declarations on key information related to
second pillar pensions.

Key Challenges
To comply with SIGEDIS directives, pension providers must send pension-related information in a specific
format, and follow a specific schedule. However, there are several challenges for such a large-scale legal
IT program:

Compliance while keeping costs low: Given the slowing growth in the life insurance business, organi-
zations have to rein in operating expenditures and invest in strategic initiatives to accelerate growth.
Adherence to SIGEDIS eats into the budget for strategic initiatives.

Compliance skillsets and localization: Since this compliancy program is limited to Belgium, there are
few experts available to support the initiative. Multiyear programs such as SIGEDIS need a dedicated
pool of IT experts (business analysts, system analysts, developers, test analysts, project managers,
architects, etc.) to retain knowledge and support implementation.

Flexibility to adapt legacy mainframe applications: Most of the adaptations for SIGEDIS programs
need to be managed in legacy IT mainframe applications that are not built to support these require-
ments. A deep understanding of the IT application landscape is needed to identify and implement
complex changes within limited budgets and strict timelines. Requirements from SIGEDIS arrive
iteratively, and the final declaration contains sensitive financial information such as premiums, tax,
reserve, etc. This demands several rounds of verification and corrections internally before the data
can be sent.

cognizant 20-20 insights 5


A Proposed Approach
Given the time constraints of the regulations, the solution requires a rigid delivery model, in which the
pension providers and their partners work closely and have a clear understanding of each others roles
and responsibilities.

A Proposed Approach to SIGEDIS Compliance

Objectives Key Success Factors Approach

Be compliant with the A proven delivery


SIGEDIS regulations Performing approach based on prior
for life ins. domain. Local experience in other life
Up in
Profile ins. engagements.
Manage the workload V-Model
in an efficient and Iterative
cost-effective way. implementation.
Robust
Independent Strong Impact Leverage in-house tools
ownership of E2E Knowledge Analysis, and accelerators
model by leveraging & Management Change wherever possible.
increasing SIGEDIS Management
knowledge. An efficient yet
cost-effective approach.
Deep collaboration Proven
Prior
with business to Track
Experience
ensure complete Record on
of Managing
coverage. SIGEDIS for
E2E
Five Years

Figure 8

Key Elements of the Proposed Solution

Compliant with Lower Cost Localization Knowledge Management


By giving E2E responsibility, Local language speaking Wiki-based KMDB framework to retain
cost will reduce drastically profile to better engage with and nurture knowledge. On-boarding
(~30%) without compromis- business stakeholder and and induction knowledge transfer
ing on quality. bridge the gap on Belgian package to have smooth, quick
context. on-boarding to manage peak workloads.

SLA based
quality
1 2 3 4 5 Service.
20-30% less
cost.

Specialized Compliancy Skillset Complexity of Adapting Legacy


Localization complemented by Strong technical expertise at
strong core delivery team at core team supported by
offshore will enable a dual technology CoE will enable a
mandate to get Belgian context robust Impact analysis and
and optimizations. Wiki-based change management.
KMDB will support knowledge
retention.

Figure 9

With effective deployment of solution levers with a global partner, up to 30% cost savings can be realized
as compared with doing everything in house. Figure 10 (next page) provides an illustration.

cognizant 20-20 insights 6


Illustration of Savings
Business Case
Annual Workload Distribution Annual Cost Comparision
Project
Management -30%
450; 15% Business Analysts
Testers
600; 20%
450; 15% System Analysts
Developers
600; 20% Developers
900; 30% System Analysts
Testers
Business Analysts
Project Management
100.000 400.000 700.000

Global Partner (including VAT) AS-IS

Global Delivery Partner - Effort Distribution Efficient Operating Model for SIGEDIS Program
Illustrative Example on Cost Savings

Assumptions: Annual Workload of 3,000 days.


630; 21%
Local Target operating model with global partner with a mix of local
1665; 56% 705; 23% profiles for crucial roles like business analyst where language
Onsite and local Belgian context is mandatory and onsite/offshore
Offshore profiles to have efficient yet cost-effective solutions.
Core delivery engine will be managed offshore or near-shore to
provide cost arbitrage.
Model is customizable.

Figure 10

After successful deployment of the solution levers, more savings can be realized by focusing on further
improvements.

The Way Ahead


After achieving compliance with SIGEDIS directives, further improvements can be realized by investing
in automation, optimization and removal of redundancies. Automation of the test suite or a new way of
working with the Lean model will make the IT program even more efficient.

Future Improvements

Optimization of Team, Process,


Technology
Optimization and continuous improve-
Optimization ment on team structure, mix,
onshore/offshore mix, process and
technology to gain further benefit to
reduce costs.

Remove
Remove Wastage
Redundancy
Automations to Improve
Remove the process Quality and Reduce Cost
steps that do not add
Automation Automations of
value or are
regression suite.
redundant to
optimize the cost. Automations of ST & UAT
suite.
Automations of manual
processes.

Figure 11
Source: Cognizant

Pension organizations can also consider a global delivery model by ceding end-to-end ownership of the
SIGEDIS program to a partner. This will enable the core internal team to focus on strategic initiatives
while saving costs.

cognizant 20-20 insights 7


References
www.sigedis.be

www.socialsecurity.be

www.db2p.be

www.eb-connect.be

mypension.onprvp.fgov.be

www.assuralia.be

www.fsma.be

About the Author


Sanjib Goswami is a Manager within Cognizants Continental Europe Insurance business unit. He has
more than 12 years of experience in life insurance software development and global services. Sanjib has
been working for a leading European insurance customer for more than eight years on life insurance
product management, product business support, business transformation and IT strategy. He holds
an engineering degree from Jadavpur University, India. Sanjib can be reached at Sanjib.Goswami@
cognizant.com.

Acknowledgment
The author would like to thank Martin Havelka, Senior Manager Consulting at Cognizant, for his support
and guidance.

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