“Festina Finance enables APG to make a huge step forward”

Published on: 21 June 2022

APG will develop a new system for the policy and capital administration in collaboration with the Danish company Festina Finance. Francine van Dierendonck, member of the Board of Directors of APG, explains the reasons for choosing the relatively small FinTech company and what her expectations are in relation to the collaboration.

The system to be developed is necessary because of the transition to the new pension system. Instead of a so-called Defined Benefit system with fixed payments, the Netherlands will be switching to a collective Defined Contribution system. This means the pension amount depends on the contributions paid and the investment returns realized. “We decided to invest in a new system, as this means a huge step forward in terms of technology, speed and flexibility", says Van Dierendonck.

Festina Finance does not belong to the major IT system houses, but is a small, specialized FinTech company. Is that choice not representing a risk?
“Every scenario involves risks, even if we would have developed the new system in-house. The existing risks are under control. We have seen Festina Finance execute an extremely successful implementation at PensionDanmark (large Danish pension fund, ed.). The Danish pension system is already further on its path towards a Defined Contribution system than the Netherlands, so PensionDanmark is a good example. Based on the proof of concept and the collaboration with Festina Finance in the past six months, we are convinced the company, together with us, is able to implement their system in a superior way. Moreover, we will also integrate the software delivered by Festina Finance in-house. The new system is developed under the supervision of their experts, but we will eventually do it ourselves. This means we are not infinitely depending on Festina Finance and a lot will still be in our own hands.”

Can a small party, such as Festina Finance, stand up to a large player like APG should the Danish company deem this necessary?
“Absolutely, but the good news is that the majority of the software components we need have already been built for the implementation at PensionDanmark. I have attended a session myself during which specialists of APG and Festina Finance collaborated enthusiastically at the interface of the pension scheme and IT. And I have not witnessed anyone sitting silently in a corner.

Is that also an example of the cultural fit between both organizations, what was one of the reasons to choose Festina Finance?
“Sure, I believe the employees of both organizations get along really well and we may conclude that the Danish and Dutch culture are really not that different. Another thing is that the pension systems of both countries belong to the absolute best.” 

You could compare the system of Festina Finance with LEGO blocks.

The choice for Festina Finance was also made because they would offer ‘state of the art’ technology. Can you give us some examples?
“The system they offer is structured completely modular. You could compare it with LEGO blocks. One LEGO block can be, for example, that the child of a deceased participant receives an orphan's pension until he or she reaches the age of 18. Another block can ensure that the orphan's pension continues until he or she reaches the age of 21 when the child is demonstrably enrolled in a study. This already involves two LEGO blocks. That's how we build the pension scheme entirely with blocks in a modular system. Festina Finance has built its software low-code. You usually don't have to touch the Java code, the actual blocks, behind it. The only thing that needs to be done, is programming the blocks in the correct order. And those blocks already exist as the schemes in Denmark and the Netherlands demonstrate a high degree of similarity. That provides us with the ability to implement the adjustments based on legislation, expected as of 2023, rather late in the process in a controlled manner. We believe that will buy us some time. The system is also flexible and fast, offering us the opportunity to properly monitor the audit trail, which is important for compliance.”

Does the fact that the system is low-code and flexible have consequences for the employment opportunities at APG?
“Not for the near future at least, because we still have a lot to accomplish together. We still need our current systems GPS and Lifetime for a long time. We expect to use the three systems side by side until at least 2030 and maybe even longer. The system of Festina Finance requires different skills, more configuration, less writing of code. We have agreed with the Works Council that we give everyone the opportunity to retrain their skills. But for the coming years we need more people for the pension administration, rather than less.”

Finally, what are your expectations and hope for the collaboration with Festina Finance from the perspective of your position as member of the Board of Directors?
I expect us to make a huge step forward with Festina Finance, mainly in the transition to the new pension scheme and in the speed of that transition. In addition, I have high expectations when it comes to further automating our processes. That is important for the quality we deliver and that participants experience in, for example, the speed of our service provision. Further automation enables us to keep our basic service provision in order in terms of costs and at the same time creates time and space to make the difference towards participants and employers. We are now gradually making that shift and I hope that in approximately 2.5 years’ time we will be able to show for the first time what our new service provision looks like: qualitatively faster and with more attention and budgetary space for personal service to participants and employers.”

Read the press release of APG and Festina Finance here