Introduced on February 1, 2021, Norway’s EPK reform has been described as the most far-reaching change in the Norwegian pension market over the past decade. It concerns some 1.5 million private- sector employees.
EPK (Egen pensjonskonto) provides a single, personal account for all occupational pension savings, including from previous employments. Employees can select their own pension asset managers, instead of those assigned by employers, which means greater freedom of choice both when it comes to investments and management of their pension savings.
For the businesses involved, the EPK reform has major implications. Empowering employees to decide who can best meet their needs of cost-efficient management and risk adjusted return on the pension savings is a challenge for providers and has made the pensions savings market notably more competitive.
In terms of technology, it has also significantly raised the bar by requiring an all-digital customer dialogue and fully automated data flows between industry parties. Lumera’s off-the-shelf EPK solution perfectly mirrors the emergence of platform business models in the pensions industry.
Achieving the status as the preferred pension partner requires providers to cater to, and attract, both employers and employees. On one hand, pension providers need to exchange new data and interact on new processes to adopt some of the key features of the reform, on the other hand, they need to compete to retain and win new customers.
EPK requires significant readjustment by pension market stakeholders, including consumer education, change management, definition of new standards, clarifying business rules and finally, implementing change through robust technology. For Lumera, these requirements equaled a call to action – certain that our technology and know-how were directly applicable to the transformation of the Norwegian pensions market.
An innovative, automated connector to the EPK hub
Lumera acted early to meet the anticipated demand for updated technology from the Norwegian pensions market – and not just for enabling customers to ‘tick all boxes’ for addressing EPK-related requirements. We also envisioned EPK as an opportunity for customers to enhance their business agility and gain competitive edge. Lumera can and will provide the means for achieving this. By adding EPK capabilities to our standard platform, providers could reduce their operating costs while developing compelling, differentiated customer offerings.
Lumera set out to identify the most critical requirements on pension providers and their policy management in relation to the EPK introduction. We found that an all-digital customer journey was the most central element to a workable solution. And we knew that this involved much more than interfaces and UX work. EPK adaptation sat at the core of customers’ policy management systems, and any successful implementation had to be underpinned by automation capabilities for large-volume machine-to-machine transactional flows, along with the design features and functionality that make for a great customer experience.
To help our customers and aspiring pension providers in Norway administrate EPK pension policies, Lumera developed a connector to the EPK hub, with the following key outcomes:
• Eliminates the risk for manual errors.
• Reduces the time for processing and communicating progress to customers.
• Provides intelligence based on customer interactions.
• Automates matching of incoming payments and reconsolidation of internal bank accounts.
• Connectivity framework which enables an all-digital customer journey.
Effective tools for digitalization, built on industry expertise
Lumera’s connector to the EPK hub enables customers to quickly embrace business opportunities created by the reform. It supports digitalization strategies and helps reduce complexity for customers when adapting their digital savings and investment platforms to the Norwegian market. And it comes as a standard feature with Lumera’s cloud-native policy administration environment.
Our hyper-automated process support provides secure, transparent, and cost-effective EPK administration. However, as regulations are subject to change over time, industry stakeholders and service providers need to adapt to any new rules and must be able to update their offerings and systems accordingly.
The inherent flexibility offered by Lumera, together with our presence and commitment to the Norwegian market, clearly facilitates such efforts. Along with our technology, Lumera also contributes vast pension industry knowledge and experience.
Key functionality and benefits with Lumera’s off-the-shelf EPK solution:
• Supports rapid product development and faster time-to-market, enabling customers to implement and go live in just a couple of months. Using Lumera New Business Management facilitates product configuration, defining fees, commissions, additional product rules, and designing business rules for administration and disbursement.
• Access the EPK hub via Lumera Integration Framework to acquire and update customer information.
• Use Lumera Integration Framework or our plug-in micro portals for end users to provide a smooth and effective digital customer journey.
• Complete overview of the automated process via Lumera Business Process Manager.
• Provides a choice of different investment options, including mutual fund savings, Lumera Fund Order Management, traditional insurance portfolio savings, or connection to securities accounts.
• Automated bank transaction reconciliation.
• Reporting to financial authorities.
With Lumera’s SaaS delivery model, customers can achieve multiple business goals:
• Be future proof, no build-up of technical debt or security issues.
• Be digital through customer-centric customer journeys providing personalized offerings without adding administrative complexity.
• Be agile and self-sustainable in developing the product offering as well as business process and omnichannel communication.
• Be effective through hyper automated processes.
• Be compliant with the legal commitment that makes Lumera unique among PAS providers.
• Introducing new line of business with an exciting return on investment.
Lumera adds further value by eliminating customers’ need for costly and hard to manage development work related to EPK adoption, such as integration with the EPK hub and updating of existing policy/contract administration applications.
How Lumera supported Nordnet’s initiative to enter Norway’s pension market
Nordnet, a leading Nordic digital savings and investment bank, partnered with Lumera to address the new market emerging from Norway’s EPK pension reform. Nordnet extended its implementation of Lumera’s policy administration system to enter the occupational pension market in Norway. There was reason to believe that EPK presented a one-time opportunity for a tech-driven challenger to gain a competitive edge over incumbents facing the same changes while dealing with legacy technology.
Nordnet set a strategic objective to be the most cost-efficient EPK service provider, enabled by the modern platform provided by Lumera, featuring a fully digitalized customer offering.
Also building on their scale and strengths in other markets, Nordnet’s EPK offering features a giant mutual fund market, including fund portfolios with different risk profiles facilitating individualization of the pension savings.
Lumera’s EPK support has facilitated Nordnet’s further adaptation of its digital savings and investment platform to the Norwegian market. The result is a secure, transparent, and cost-effective EPK administration, which has enabled Nordnet to tap into a market with NOK 350 billion of assets under management.
“It’s a privilege for us to engage with Nordnet to support their business initiatives in Norway and help create a fully-featured EPK offering with an outstanding customer experience. This is a true partnership which should serve as a fine example of how Lumera’s offering is directly connected to business development and growth strategies for life and pension providers,“ says Mats Lillienberg, CEO, Lumera.