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  • Writer's pictureJiří Caudr

This is why Fintech has a major role in the future of the Pension Industry

The Pension Summit

The Pension Tech Summit, organized by Holland Fintech, MN and the Tech Factory was held on the 17th of May at the Caballero Fabriek. During this two days event an overview was provided on how different developed countries seek collaboration with young innovative companies and incumbent pension industry stakeholders to explore the future. The Global PensionTech landscape is changing quickly due to new, innovative and disruptive companies that combine the new possibilities of technology and changing customer demands. Therefore Holland Fintech created an infographic to create awareness within the pension industry regarding the innovation and technological developments available and applicable. The situation as it is today, how it is evolving, the new trends and disruptive ideas that could change the way we manage our pensions in the future. A recent study of the future of pension show that 75% of employers, in the Netherlands agree that if employees are given too many alternatives, they will not be able to make good decisions. This is why we need to make the different pension systems easy to understand and transparent. We wanted to share our insights from the summit with our readers, because the future of pensions lies ahead of us.

“Adapt or Die”

We are in a time of Digital Darwinism, an era where technology and society evolve faster than the adaptive speed of businesses. According to an IBM report, 10 key Marketing Trends for 2017, 90% of the data ever collected was produced in the two past years. This changes the way we do business, as we have to constantly innovate to catch up with what is becoming possible, and propose the best service to customers.

Need for a positive change

Roos Vermeij, executive director at the Pension Fund (PME), stated at the event that

the pension industry is still very old fashioned, bureaucratic, and complex. This is the

reason why it is so slow to innovate . There is definitely a need for a change with new

challenges emerging, with for instance, the need for more personal customer experience and a growing aging population (c.f tables).

Furthermore, young generations do not believe in the current system (The future of pensions survey, 2017). That is why we need to innovate and be more transparent. There is a real need for a disruptive change in the pension industry.

We need to involve the younger generations into new ways of managing pensions. There is a concrete lack of interest, due in part to the uncertainty about future employment, and to the lack of transparency of the current agencies. With 70% of the Dutch population reporting they believe the pension system should be reformed, some changes have been recently discussed. The reform should improve the long‑term sustainability and the intergenerational fairness to the pension system. This should be done by the implementation of a personal pension account instead of the traditional collective pension plans. As a consequence, the pension system will be more flexible, as each customer will be able to personalize its own pension fund in age, contribution rate, investment options, pension provider and more.

New emerging trends

Even though the industry is slow to disrupt, it is evolving towards a more connected future. The market becomes more transparent every day as The Melbourne Mercer Global Pension Index, a tool to measure and compare pension systems around the world, makes the different pension systems widely known to the general public. In addition to this, the recent rise of the number of private companies and start‑ups operating into the pension industry, starts to offer a more diverse portfolio of pension systems.

For instance, Nestegg, a dutch start‑up uses blockchain to offer fractional ownership to the sustainable infrastructure powering the person's future, ultimately giving people an alternative to traditional pensions. As each individual will receive a return on investment proportional to the percentage of ownership in the asset.

“We believe the customer should always have a choice; the lack of transparency and fairness of the system needs to be addressed. Therefore we are exploring new business models to disrupt the pension industry to bring the change that is so desperately desired. ” said Rolf Fouchier, CEO at Creative Dock NL.

We are currently working on a project that will give customers even more financial freedom, as they finally reach the age at which they are entitled for their pension. A Reverse Mortgage platform that enables customers to monetize a part of their house, diversifying their sources of income, thus not only relying on their pension funds. The main goal is that “Seniors can keep ownership of their house while enjoying an active, healthy lifestyle of their own design”, explains Rolf.

Together we should strive for a more flexible, care‑free pension system.

If you would like to know more about our project, please feel free to contact us!

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