Denmark's PKA makes 'ambitious' move to win private sector schemes
Danish labour-market pension provider PKA is making a “big, ambitious move” to take on thousands of new members in its home sector and win private-sector pension schemes from the hands of commercial providers such as Danica and PFA.
The DKK250bn (€33.6bn) pensions provider, which runs three social and healthcare sector pension funds, has announced a new pension product called PKA Private, which can be tailored to suit different requirements to appeal to a wider range of potential customers.
Tomas Frydenberg, executive director in charge of membership matters, told IPE: “This is part of a two-step approach, and what we are saying is that we now want to take on private individual self-employed people and others who are not working as part of a collective agreement.
“The second step on top of that is that we have now entered the market to win larger schemes or groups somehow affiliated with the health and social care sector.”
These could be private clinics servicing the public sector, for example.
“It’s a very big move and very ambitious, and we are launching the products so we are ready for these different groups,” Frydenberg said.
The rationale for the new strategy, which PKA had been working on for some time, was partly to cater for the changing needs of existing members, he said, and partly because the prevailing trend towards consolidation in the Danish pensions sector means providers must compete actively for customers – or risk eventual extinction.
“What we are seeing in the labour market is an increasing tendency for people to move between the public and private sector in their careers,” Frydenberg said, adding that if PKA were unable to take that on board, it would have a problem with existing members.
The gradual development of the pensions provision sector in Denmark is towards economies of scale, he added, and PKA wants to be part of this.
“We want to be the ones eating the others and not the other way around,” he said.
Fellow labour-market pension provider Sampension began targeting corporate pension scheme contracts at the end of last year.
Frydenberg said PKA was also opening up to the commercial sector like this but, at the moment, was only aiming at schemes and individuals in the heath and social care sector.
He said there were around 10,000 potential individuals such as nurses, midwives and social workers that PKA could win as members with the new product push.
But the possible expansion of PKA’s current membership of 275,000 far exceeds 10,000 because of its plan to target new employer and group schemes, he said.
Frydenberg said PKA may be competing for new business against the likes of PFA and Danica as the current providers for such schemes.
The new product treats elements of the standard PKA pension product as building blocks, allowing for these to be combined in various ways.
For instance, customers can forgo the insurance element, or include a different type of insurance such as income-protection insurance, which is not generally necessary in the public sector.
While PKA’s standard product is invested on a with-profits or average rate (gennemsnitsrente) basis, through its administrator Forca, Frydenberg said PKA would also offer market rate (markedsrente) investment as an option.