Danish financial technology firm Grandhood said the deal cut last week with Velliv has turned its product into one that is more scalable and better suited to its international plans, in which the UK could be a prime target.
Grandhood – formed in 2017 as a user-friendly digital pension product for entrepreneurs and small and medium-sized enterprises (SMEs) – has now linked up with the long-established and recently-mutualised pension Danish provider to launch a new joint pension product in the fourth quarter of this year.
Jon Lieberkind, co-chief executive officer and founder of Grandhood, told IPE: “We want to be the preferred pension partner for freelancers and SMEs globally, but our version 1.0 was not as scalable a solution as the 2.0 version we have now after the Velliv deal.”
Up to now, Grandhood has been a licensed asset manager with a partnership with Denmark’s Saxo Bank, but with Velliv, it will become a life-insurance broker with a life-insurance company as its partner.
“In Denmark you need to hold a life insurance licence in order to be allowed to distribute lifetime annuity savings plans (Livrenter) and life insurance products. Banks are not allowed to deliver these products,” said the firm’s other co-CEO and founder Mathias Bredkjær.
“If you want to be relevant and able to compete in the Danish workplace pension market, you need the complete financial product suite that only life insurance companies can offer,” said Lieberkind.
With Velliv, he said, Grandhood could now enable customers to gather their legacy pension pots into the product, because it would be able to offer a combination of pure defined contribution (DC) and hybrid defined benefit products, whereas in the Saxo Bank setup it had only been able to offer a pure DC savings product with limited tax deductibility.
“With the Velliv offering our customers can save unlimited with tax deduction in the ‘Livrente’ savings product,” he said.
The Velliv collaboration will also allow Grandhood’s customers to choose their own risk profile and a pure ESG pension savings plan, he said.
Rather than trying to offer a complete investment service as they had to start with, Lieberkind and Bredkjær said their firm would now concentrate on its strengths as a digital customer interface, while seeking established pensions investment and insurance companies to link up with in other national markets.
They said the firm had not yet decided which country to tackle next, but that the UK did seem appealing for a number of reasons.
Auto enrolment had made it compulsory for employers to include staff in a pension scheme unless workers opted out, the pair said, adding that the existence of the new system meant there was less need to educate the market about pensions.
“Furthermore, we see room for competition with only Smart Pension trying to make a difference in the UK market for workplace pension solutions,” Lieberkind said.
Other markets such as Holland, France and Spain could also be interesting as potential expansion locations, he said.
“We are mainly looking for countries with strong private sector savings,” Bredkjær said.
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