The EU pension system continues to evolve.
In our last two posts on the European Union’s pension system — “Putting PEPP in Retirement Planning” and “The Slow Road to PEPP” — we introduced PEPP (the Pan European Pension Plan) and updated its status, highlighting the latest PEPP-related information from the European Parliament’s Economic and Monetary Affairs Committee (ECON). Much has happened since then.
In the Netherlands alone:
- The digital platform provider, Conduent, exited the Dutch market, leaving several pension funds without administrators, PepsiCo and Makro among others.
- The provider tapped to replace Conduent on those two funds, Achmea Pension Services, was already in the process of shuffling eight other funds.
- Deloitte even suggested back in December 2017 that mandatory participation might be abolished in five or six years, causing pension providers to compete with insurers.
In addition, providers looking at their revenue models and trying to find administration systems are looking for economies of scale to reduce service costs. But that may not be enough.
The Big Picture
Beyond systems and scale, pension-service providers will have to work with their pension fund customers in an effort to reduce the complexity of their pension schemes. This will require carrot-and-stick arrangements: New service models that feature self-service and simple, standard schemes will be rewarded with low service fees. Complex and/or custom schemes will be charged on individual bases with considerably higher service fees. Such service models are quite common in several industries, especially the service industry. Examples can be found in HR, payroll, tax, and accounting services, as well as in our own industry with IT Service Management and other AMS services. The challenge — and the opportunity — lies in the fact that none of the pension administration systems currently in use were capable of handling such new service models … until now.
During recent meetings with large pension service providers in the Netherlands, msg and SAP showed we are ready to take on this challenge with a combination of platform and/or managed software service models (PaaS and/or MSaaS) based on SAP S/4 HANA ERP Cloud. Over the course of the next several months, we’ll be required to demonstrate our technological and administrative capabilities to the pension market.
Let’s Do It
The word is spreading fast. We’ve already received invitations from several Dutch and international providers. We look forward to delivering on our promises and to helping pension-plan providers and their members get the administrative capabilities they need and the customer service they want.
In the words of the late American science fiction writer, Robert Heinlein: “Everything is theoretically impossible, until it is done.” And we are planning to get it done.
For more information on pension solutions, please visit our website.
