The leadership of two Danish pension funds are seeking a full merger within three years, according to schemes’ joint management head.

JØP, which covers lawyers and economists, and DIP, which provides pensions for engineers, want to extend their current close cooperation over investment as well as administration.

Søren Kolbye Sørensen, chief executive of P+, the joint administration company that runs the two pension funds, told IPE: “We are intending to inform the members that the boards are working on this project with the aim of achieving a full merger within two or maybe three years.”

JØP and DIP, which manage DKK95bn between them, have been moving closer together in terms of their investment operations and administrative activities for several years, in pursuit of — among other things — cost savings and increased efficiency through economies of scale.

P+ was officially set up in July 2015 as the joint administration company for the two pension funds.

However, the two have remained independent pension funds.

Kolbye Sørensen said the formal decision to merge will take place at a later AGM of the two pension funds’ members.

“And it is important to underline that a merger will only take place if the members of the two existing pension funds decide to implement the merger,” he said.

“We find that there are a number of benefits that we still have the possibility of achieving – both on the cost side and also on the customer side,” he said.

He added that it was the leadership’s job to illustrate the potential benefits to the pension funds’ members over the coming months and into 2018.

Asked if it was possible that the merged pension fund would then take on business from other smaller pension funds in the future, Kolbye Sørensen said: “One step at time.”

He said: “If the members agree and we succeed in completing the merger, we would potentially be open for further cooperation with other partners.

“But this is for the future and the board to decide and that is not in the front of peoples’ minds now.”

Last summer, the Danish pension fund for doctors, Lægernes Pension, said it would not merge investment operations with those of DIP and JØP, because the differences in processes were too significant.

The pension fund had hired an external consultancy to find out whether it made sense to merge its investment the two professional sector funds.