For years, pension funds and pension administrators have been in a transition phase towards a ‘new’ pension system. These organisations have had to think about, among others, strategic options for the future. However, the years of debate about the new pension system have made it more difficult than expected to bring disruptive apps and other developments in artificial intelligence and robotics to the market. Recently, though - driven by programs like ChatGPT - there is a new wave of urgency on the topic of PensionTech
What is PensionTech?
PensionTech is a subcategory of FinTech; a collective term for digital applications, software and other technologies that are being and/or have been developed within the pension sector.
The Future of Pensions Act offers pension funds, pension administrators and other stakeholders plenty of opportunities to innovate with new technologies (e.g. ChatGPT or Bard) in the coming years. Parties need to redesign existing processes, with new components such as the lump sum, choice guidance and the duty for administrators to encourage participants to engage actively. However, they will not only have to deal with the Future of Pensions Act. ‘New’ subjects such as sustainability (ESG), trust in institutions and technology also require attention. By continuing to innovate, they can stay relevant to participants while working towards the future and reducing costs. With the help of PensionTech, this can be done faster and above all more cost-effectively.
In short, it is up to pension administrators and employers to take advantage of this now and start innovating as soon as possible. This avoids making wrong choices now for later.
The creation of a PensionTech product involves several parties within the pension value chain. The parties involved will need to fine-tune technology-driven innovation projects to make PensionTech a success. This can be done in collaborations, with external innovation partners and/or in experiments. Each party has its own way of doing things, but the themes for the future, the opportunities and risks involved and their timing are common to the entire pension ecosystem. A thorough knowledge of both technology,relevant laws and regulations is key.
PensionTech in the coming years
In the coming years, innovation will continue to take place specifically in the context of the Future of Pensions Act. PensionTech is currently focusing mainly on encouraging participants to engage actively, optimising the provision of information and putting administration systems in order, so as to be in line with requirements, particularly those of the Future of Pensions Act. In the coming years, we expect to see more innovations and integrations.
In short, we can no longer work without PensionTech. We expect pension schemes to become more of a commodity in the coming years, while the ability of funds and administration organisations to differentiate themselves will have to come more from asset management and communication. Using PensionTech, we can empower the participant to shape their future income.
What can PwC do for you?
The Future of Pensions Act represents a huge transformation of the pension system. Almost all organisations will have to adapt their systems and ways of working to the new legislation. Pension administrators and employers face major challenges in the coming years, in which it will sometimes be difficult to maintain oversight. The challenges of the Wtp are therefore best viewed in the context of the broader issues currently facing society, such as ESG, sustainability and technology. This helps to keep a lid on cost increases and enhance appreciation of administration among participants. With our integrated approach, our focus on cooperation and with the help of specially developed digital solutions, we guide you step by step to a future-proof implementation based on the right facts. If you would like more information, don’t hesitate to contact us.
