The Danish Pension Fund for Pharmaconomists is searching for a new administrator for its 7,800 members.

"We expect to have selected a collaborator and negotiated a deal before this summer. And we expect to be ready IT-wise and physically before the year is out. That's our ambition," says the pension fund's chairman, Henrik Klitmøller Rasmussen, to FW Asset Management.

The pension fund has invited pension funds and companies to compete for the role as new collaborator, and Sampension has publicly declared its interest.

"It's public knowledge that there are other pension funds out looking for a future administrator. Naturally, we want to compete for that," said Hasse Jørgensen, CEO at Sampension to FWAM.

The Danish Pension Fund for Pharmaconomists has, in collaboration with Pwc consulting services, found 60-70 benchmarks to discuss with the potential partners.

"It's a comprehensive and elaborate piece of work during this stage of the process," says Rasmussen.

However, the halfway point is approaching, he says.

"We're working on a process of clarification in which we run a number of workshops for the different benchmarks, and that is all going to culminate in a workshop later this spring where the whole board of directors participates," he says.

Average interest rate schemes

The pension fund is one of Denmark's oldest with history reaching back to 1946, when its name was Apoteksdefektricers Pensionskasse (English: Dispensing chemist's assistants' pension fund), also known as the 10-kroner fund, named after the contribution amount.

Today it has 7,800 members, making it the smallest pension fund in Denmark with its own administration. Its total assets are DKK 10.3 billion (EUR 1.4 billion), and annual contributions last year were just about DKK 198 million.

Rasmussen says that members are going to have their existing pension schemes moved, where the majority of savings are in average interest rate with conditional zero interest, while a smaller part has an old scheme with higher guarantees.

"The plan is to move everything as it is. But in the long term, we also have to be able to offer our members a market rate scheme. But we have to make it cheaper than if we made it from scratch," says Rasmussen.

"Our ambition is, in the short run, that our members feel no change, but in the long run, they will of course reap the benefits of cheaper and more resilient administration."

Switched to Blackrock in 2016

What is most important to you in a new administrator?

"We find it important that it's someone who can perform the duty, someone who has done it before, that we can achieve substantially improved efficiency and savings, and that we gain more resilience in the future," says Rasmussen.

"But a new partner also needs to be capable of handling external challenges, such as the Solvency II requirement, the new data protection regulations, and other things that we have to implement. We want better options for quickly and inexpensively bringing digital solutions and product solutions to our members," he says.

In 2016, the Pharmaconomists switched to a new asset manager when Blackrock took over from Danish money manager Sparinvest. The switch was partly because Blackrock was capable of helping with the increasing number of regulatory reporting requirements, such as Solvency II, which took effect on Jan. 1, 2016.

The recent change in asset manager also means that the Pharmaconomists are not necessarily looking for an administrator to handle investments.

"It's not a given that we will move our asset management, which currently lies with Blackrock. We have, of course, asked for options for asset management, but we do have a relatively new agreement with Blackrock, says Rasmussen, elaborating further:

"We have stipulated that we are free to choose whether we continue to use an external asset manager. But it's no secret that we also accept offers to move the whole lot. But it's important to us have a free hand in the matter."

English Edit: Marie Honoré