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Impact Investing

IPE special report May 2018

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UBS sees unbundled German pensions market

GERMANY - The German pensions market is likely to see its services unbundled towards a more specialist approach, according to Tim Blackwell, managing director of UBS Global Asset Management in Germany.

Speaking today at the fifth annual European pensions market forum in Frankfurt, or PensMart, Blackwell forecast an increasing number of companies will expect customised solutions for their pension plans.

The sheer complexities facing the occupational pensions market are leading to an unravelling of the "pensions value chain", Blackwell said.

He told delegates that this is leading to a move towards specialists and best-in-class services - in administration, coverage of biometric risk, distribution, product development or investment management.

In the past, some of these services were offered on an in-house basis, and specialists are called in only to fill in the "missing link". According to Blackwell, the German pensions market industry is likely now to follow the trend set by Switzerland, whereby a one-stop shop is offered on a platform-basis.

He says that open platforms will emerge, similar to that offered by Noventus in September, whereby consultancy, actuarial services, multi-management, and administration will be under a single platform, with the individual services offered by different companies.

For the small to medium sized companies which dominate the German market this will result in cost-efficiencies while allowing them access to the best providers.

In order for such platforms to be successful, there must be trust between the providers. Says Boy-Juergen Andresen, chief executive officer and managing partner at consultants Dr Heissmann: "Consultants need to know the strengths, and know that they have reliable providers." Blackwell agrees that building trust will take some time, but the transparency of the platforms will be a key driver.

The role of gatekeeper of the platforms is largely expected to fall to the consultants or administrators, who will act as general manager. Here the market is expected to open up in Germany, as there are relatively few administration providers in the market. Blackwell is confident, however, that the expertise is there.

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