Almost one year ago the arrival of a new type of pension administrator – the premium pension institution (PPI) – shook up the pensions market. Under the new Pension Accord, pension administrators must comply with more stringent requirements while also facing administrative challenges. All in all, the dynamics in the pensions market have greatly changed and the end is not yet in sight. Against this background, outsourcing the administration and communication activities can be a good solution.
White label BPO services
Instead of keeping the entire pension scheme in-house, a pension provider can also opt to outsource its administration and communication functions, while remaining the first point of contact for the customer. This is also known as Business Process Outsourcing (BPO). The pension administrator retains its own identity and continues to determine which products it offers to its members and what those products look like. Opting for a BPO solution is often more efficient than developing your own investment and pension administration platform.
“With BeFrank’s BPO solution, members have their own personal pension page (portal), which gives them full information on their pension, investments, costs, expected pension payout and degree of risk. The portals can be created in any house style, so that the member never sees he is actually using BeFrank’s infrastructure,” explains BeFrank CEO Folkert Pama.
BeFrank’s BPO services are modular and can be delivered to fit diverse scenarios. The most important modules on offer are administration, insurance and asset management. These can be purchased as a full-service package or as separate modules.
How can we help?
The certainty of traditional schemes is tempting but no longer realistic. The costs are simply too high, as is also acknowledged in the new Pension Accord. But how can we make the transition to defined contribution (DC) and simultaneously introduce an element of uncertainty?
Pension funds can opt to continue as a pension fund and market their own type of DC. With DC schemes, however, the investment risk is borne by the employees and this must be clearly communicated. Providers who opt for a BeFrank white label BPO solution can make use of BeFrank’s innovative and online communication tools.
Another possibility for pension funds and other professional providers involves setting up their own PPI. BeFrank can help, drawing on its extensive experience with the relevant licensing and regulatory compliance procedures. Among other things, parties setting up a new PPI must fulfil certain obligations under the Financial Supervision Act (Wet op het financieel toezicht), send the required data to the supervisor, establish a connection with the National Pension Register, and ensure that good basic accounting systems are in place. BeFrank also has experience with setting up the legal and administrative functions of the organisation.
Some pension funds may take the view that shifting the investment risk to the pension members is too big a step. In this case, BeFrank can offer a white label hybrid model. With this model, the level of the pension contribution is determined according to DC principles, but the contributions are used to buy wholly or partly guaranteed pension rights. This is often an attractive alternative for pension funds that consider a sudden switch from DB to DC as too radical.
Read the whole article: Pension Industry in Motion