Upstart PPIs are set to challenge traditional Dutch DC providers, says Tim Burggraaf.
As of last Friday, the Dutch defined contribution (DC) provider market officially began offering a third open PPI provider, offering DC savings plans in the second pillar.
There were already Robeco and BeFrank, but now there also is Brand New Day. It almost sounds like a 1960s revival, and the product marketing is aiming for the same feeling. Give it a few months, and then the Dutch may be dressed up like Austin Powers, dancing around and owning a 'shagadelic' pension plan - "Yeah, baby! Yeah!"
It is quite interesting to see that this new provider is picking up a fundamentally different branding strategy, since the brand of insurers - the traditional DC providers - has been damaged by recent cost scandals. So branding the new type of provider as those vehicles that are "being frank" or heralding a "brand new day" in pension history is very smart and likely to succeed.
All in all, the battle is on. Let's see what the existing providers come up with. One thing is clear, though - if they do not fundamentally rebrand (and reconfigure) their existing product solutions, they might be on the loosing end of the market.
The remaining question is, how much will the members benefit from this in the long run? In my opinion, these PPIs will significantly lower the general cost level of DC products, but some of them may crash in the process.
Tip of the month: keep a close eye out on DC risk management!
Tim Burggraaf is a consultant at Mercer