DENMARK - Finanssektorens Pensionskasse (FSP) pension fund said it is in talks with service firm Forca about outsourcing all of its administration to the provider.

The DKK23bn (€3.08bn) pension scheme, which has 17,000 members in the financial sector, said it wanted to focus more sharply on core activities, where it could make a difference for customers.

"The FSP pension of the future will focus more on providing excellent customer service in a modern pension plan with choices, and on running an investment strategy able to give customers a long-term return at the top of the pensions industry," the fund said in a statement.

Steen Jørgensen, managing director of FSP Pension, said: "Smaller and medium-sized pension funds like FSP Pension will always have to run faster in order to keep up with the increasing demands of authorities and the outside world for, among other things, openness and paperwork.

"This places a big demand on the ongoing development of IT systems, and at the same time entails a lot of dependence on individuals in specialised areas," he said.

"So we will investigate the possibilities for gaining economies of scale by outsourcing those administrative tasks that require high levels of resources, which are the same for pension funds, to the service firm Forca," he said.

Forca is a service company for labour market pensions - a joint venture set up two years ago by Danish pension funds: Lærernes Pension, Pædagogernes Pensionskasse and PKA. The three funds each own a third of Forca.

Jørgensen said he expects the outsourcing to be able to cut FSP's average administration costs per customer by about DKK1,000 a year. Over 40 years, this would translate to a further DKK60,000 in today's money to add to those individual savings, FSP said.

"Our administration costs will come in at the best end of the industry, when compared with the average customer deposit of around DKK1.3m - that is, when costs are shown as a margin of yield," said Jørgensen.

The aim is for FSP to continue to match the competition in the pensions sector and be a strong alternative to the commercial pension providers, the pension fund said.

FSP pointed out many of its administrative functions, including IT and property administration, had been outsourced over the last few years as part of the formation of FSP Invest.

Earlier this month, the fund announced it was outsourcing the administration of its Danish residential properties and leases to Dan-Ejendomme.

"We think an agreement with Forca will be able to strengthen FSP Pension's position in the future," said Jes Damsted, managing director of Forca.

"At the same time we are very aware that a contract should ensure continuing good jobs for FSP's staff and personal development opportunities in both skills and careers at FSP and Forca respectively," he said.

The Danish pensions industry is now under pressure from the government to improve competition and transparency by improving administration and the associated fees.

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