DENMARK – Unipension is to take a 25% stake in the pensions administration joint venture Forca, bringing the number of owners to four, in a move to cut costs but stay independent.
Unipension – which manages assets of more than DKK100bn (€13.4bn) for three Danish professional pension funds – said it signed a letter of intent with Forca to buy into the company's ownership and outsource its pensions service and advice functions.
Mette Carstad, chairman of the business committee at Unipension, said: "One of our strategic ambitions in the last two years has been to increase volumes, and that is what we are doing by becoming a co-owner of Forca on an equal footing with the three existing owners."
Forca is currently owned by teachers' pension fund Lærernes Pension, the five pension funds administered by PKA and Pædagogernes Pensionskasse (PBU) – the Danish pension fund for education practitioners.
The company carries out pension services for its three owners as well as for those pension plans at AP Pension that used to be run by financial sector scheme FSP before it merged with AP Pension last year.
The inclusion of Unipension's 110,000 members will bring the number of pension scheme members serviced by Forca to 600,000, Unipension said.
Carsten Koch, chairman of Forca's supervisory board, said Unipension was an example of three pension funds that had come together and done this very well.
"Their challenge has been to create more volume, so they can administer on an even bigger scale in order to secure lower costs for their members," he said.
"We take it as a great compliment to the work we have already done at Forca that Unipension is choosing to buy into us."
The three pension funds managed by Unipension are the Architects' Pension Fund (AP), the Pension Fund for Danish MAs, MScs and PhDs (MP) and the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD).
PKA, Lærernes Pension and PBU welcomed the new deal, saying it would lead to even lower costs for all parties and more effective service for members.
The letter of intent will now be followed by analysis of the economic, personnel and other aspects of the proposed cooperation, and the matter will also be discussed at the AGMs of Unipension's three pension funds, Unipension said.
While Forca will manage Unipension's service and advice work, investment and administration will remain the work of Unipension's investment arm Unipension Fondsmæglerselskab, which it established in 2011.
"Our investment company has done fantastically, and looking at the comparisons of returns, it would be wrong of us to change anything," Carstad said.
"We set up the investment company so that others can come to us and have their assets managed, and we have already had many enquiries."
In a letter to members, the chairmen of the three pension funds said Unipension had spent last year and this analysing its strategic opportunities for securing the future of the pension funds by working with other parties –but without giving up its independence.
"Against that background, we drew up detailed tender documents, invited a number of suppliers to bid on the task and made a comparative analysis that identified Forca as the most suitable partner," the chairmen wrote.
Unipension told members of its pension schemes there were no plans to enter into an actual merger.
Future staffing needs had not been clarified, it said, but added that redundancies were unavoidable.
"Some employees from Unipension will be moved to Forca," it said. "But, naturally, we will look at how we can perform the tasks more efficiently, and we cannot avoid redundancies.
"Unipension will also retain a number of employees in-house, as the other institutions do."