DENMARK - PensionDanmark has gained approval from the Danish government to access central government databases and pay members' pensions direct into bank accounts which, until now, were reserved only for receiving government monies.

The pensions provider has been given permission to pay individuals' pension income into their "easy accounts" from May 1, as part of a move designed to better integrate information between government bodies, businesses and individuals, as well as reduce the need for paper-based pensions processing.

PensionDanmark's chief executive Torben Mogen Pedersen told IPE the new approval will see PensionDanmark effectively become a paperless pensions provider.

More importantly, it means officials can gain access to information ahead of a person's retirement date and ensure they receive their pension income into their ‘easy accounts - introduced two years ago - without needing to contact them for details of their bank accounts and other essential data.

"In the old days, when you sold in a pension, you completed a form and sent it to us. Now, all benefits will be paid up on the basis of a phone call at retirement age or on data we collected from public registers.

"This is a secure way to make sure the members are always getting what they entitled to, even if they are not aware of their insurances and a guarantee of members' rights. It is also a very good customer service, as people find it easier to make a call rather than fill in papers. And it is also very cost-effective," said Mogen Pedersen.

Unlike most other European countries, Denmark has an integrated identity information management system which, since 1967, requires every individual to be issued with a unique identity number and use it in all correspondence with government bodies and financial services operations.

Benefits in recent years have meant improvements to information flow and customer service by financial firms, claims Mogen Pedersen, as information can be sent by government authorities to companies advising them, for example, an individual has died and life insurance claims can then be proactively presented to families in the event of a person's death, rather than waiting for a family member to complete the necessary paperwork.

Similarly, the government's central diagnosis register is also linked to financial firms which means it is possible to ascertain whether individuals are entitled to critical illness payouts in the event of cancer, for example.

Any access to these government data  systems does carry with it stringent requirements, notes Mogen Pedersen, as the Danish Data Authority requires PensionDanmark to provide a detailed description of all information it handles and manages, to make sure data is secure at all times.

PensionDanmark has been given first mover advantage to other pension providers in its access to easy accounts in part because it manages Pillar One pensions as well as its other collective pension scheme services.

That said, this latest development is part of a wider project in Denmark to give pensions members improved information on their retirement plans, as it is now mandatory for pension funds and life insurance companies to declare, to a common standard, the costs each individual member pays for management of their pension plan.

"Over the next couple of years, we will see a leap forward regarding transparency and differences between insurance companies and pension funds in terms of costs, which will increase the competitive pressure to make cost-effective solutions and develop  better pensions systems," added Mogen Pedersen.

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