Smart Pension is planning to start offering its pension administration platform to Dutch pension funds and pension asset managers. The UK-based fintech, which launched in 2014, sees the upcoming switch to a defined contribution (DC)-contract in the Netherlands as a good entry point.
“In the Netherlands, the switch to one of two contracts under the new pension system requires substantial changes of the existing administration systems that often are not up-to-date anyway,” said Dan McLaughlin, director International at Smart.
“This will cost millions of euros, and the options are clear: are pension asset managers and self-administrating pension funds ready to make these investments or will they switch to a DC-platform that has already proven its worth?”
Smart, one of the UK’s largest providers of workplace pensions through the Smart Pension Master Trust, announced earlier this year it was planning to expand to the US and Australia.
Over the past few years, it has secured funding from Natixis IM, JP Morgan, LGIM and Australian administrator Link Group to secure a “rapid international expansion.”
The company’s DC-platform currently serves the insurance companies New Ireland Assurance and Zurich, and has just concluded a new contract with an American company, added McLaughlin.
Smart’s platform consists of several components: the administration platform itself and its underlying software; the collection of pension contributions; and the paying out of pensions.
Through an app, the platform offers an overview to members of their existing pension pot, the level of their expected pension and the option to choose an investment profile. Incoming premiums are automatically being invested in investment funds.
McLaughlin claims Smart’s platform can be tailored to the specific characteristics of each national pension system. “We believe we will be able to execute both variants of the future new Dutch pensions contract, though we have to wait for the details to come through. We can handle the Dutch pension reform.”
The first draft of the new Dutch pension law is expected before Christmas.
Smart will deploy a country manager in the Netherlands and plans to eventually start a dedicated office in the country. “It’s important to have feet on the ground in every country we’re active in. You can’t do everything from London. How many people we will station in the Netherlands, will depend on the growth in client numbers that we will see. We haven’t yet been asked to participate in tenders, but that’s not a problem as I expect most pension funds and asset managers will only start tendering contracts by 2021,” said McLauhglin.
McLaughlin sees the fact Smart is already running a pension fund in the UK as an important edge of his company compared to other fintechs. “Often there is a blind spot when pension funds and technology companies start working together. They know little of each other’s business. But we have acquired knowledge and experience on both sides.”
McLaughlin emphasised Smart is not planning to launch a pan-European pension product (PEPP) in the near future, though he adds it could provide services to companies launching such a vehicle.