Danish giant ATP enters UK market

The Danish pension giant aims to offer “simple and low-cost” services for the low income earners in both the occupational and third pillar pension spaces. This is a segment of the pension market it considers being underserved by UK providers.

ATP got a taste for the UK market when it tendered to become UK’s National Employment Savings Trust (Nest) administrator last year. After being short-listed by the Personal Accounts Delivery Authority (now Nest Corporation), ATP pulled out of the running in October 2009, citing risk-reward reservations.

Morten Nilsson, head of ATP’s international operations, said the provider decided there was a case for expanding into the UK following market analysis it undertook for ther Nest contract.

But ATP officials recognise this is quite a risky move for the Danish pension manager. In a speech at ATP’s opening reception, Lars Rohde, chief executive officer of ATP, said: “Our plans may be a bit opportunistic, but we are investing on the behalf of Danish pension funds, so we have to make money.”

Nilsson added ATP would not have embarked on such expansionary plans if it did not think it could easily reach the “right scale” needed to be profitable, which he placed at around at least 500,000 members.

However, he did not rule out the provider exiting the UK by next year if things did not go according to plan.

At this stage, ATP has not disclosed whether it will provide services to individuals, to existing pension schemes or to both. Nor has it said exactly which services it plans to offer.

Nilsson said “the easiest thing” would be to start having a presence in the UK market by offering investment services to small pension schemes, but he also said all options are still open.

In its analysis of the UK market, Nilsson said ATP found there were millions not saving enough for their pensions. He also said UK providers did not design pension products for the low end of the market.

ATP’s offer, which guarantees the repayment of at least 80% of the contributions paid by a scheme member, will try to introduce elements of risk-sharing between individuals and pension providers.