Peter Roos is chief commercial officer at Lumera and his comments in Professional Pensions this week are pretty simple, you cannot avoid investment in administration software if you want to compete as a consolidator

“As we have seen first-hand through Lumera’s work in Sweden, scale improves outcomes only if these building blocks are developed and prioritised over a land grab on assets, supported by clean, reliable data and systems flexible enough to meet future regulatory and product demands”.

I have been thinking a lot about the administration needed to run a CDC scheme. When I was looking at what would be needed to run a CDC scheme I had a cautious outlook on the likely take up of CDC. I no longer think that way. That is because demand from CDC seems likely to outstrip the capacity of the original administrators we had expected to carry the load.

In my work preparing for submitting our proposal to the Pensions Regulator in August , it has become obvious that the investment in software to administrate a multi-employer CDC will be considerably bigger than we had envisaged.

We know at present that only TPT are going to offer a multi-employer CDC and they are already a consolidator of DC (Master trust) and will be a DB consolidator (if they can become a Superfund). It will be interesting to see how much they will need to develop their DC systems to include CDC in its suite of offerings.

I have had the good fortune to spend time in January and February with the old luminaries of Higham Dunnet Shaw and a leading consultancy in KGC, it is clear that administration has been under invested in for pensions. But what is becoming evident is that DC and CDC will have the responsibility of paying by default retirement incomes till the member’s death and if a partner’s pension is allowed – beyond.

Superfunds, as I know from my time working with Pension Superfund are subject to serious scrutiny from TPR and it is clear from reading the Pensions Bill and the draft of the CDC Code, that consolidation DC, CDC or DB superfunds is going to put a lot of pressure on providers to have the software and administration.

There are a number of new technology based software offerings available in the market. Lumera is one of them, other similar sounding software is from Festina, Aptia is a well funded administrator while services are available to the market through Mantel – part of the Spence empire.

2027 is likely to be a year of delivery not just for DB and superfunds, but DC as it offers default retirement income pathways to members. CDC offers a DB style pension to members with a DC contribution structure to employers.

As with the dashboard, innovation is not just comparable but learned from northern Europe.  Sweden and Denmark own two new pension software providers, one has a foot in Netherlands. It is not just in the Winter Olympics that these countries are strong. It is likely that in dashboards and pension administration, we will have to invest with them to catch up.