Dutch pension fund managers APG, PGGM test out blockchain system

AMSTERDAM (Reuters) - APG and PGGM, the managers of the two largest Dutch pension funds, said on Monday they are testing a blockchain-based system to help make administering pensions simpler and cheaper.

FILE PHOTO: Bitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, May 27, 2015. REUTERS/Benoit Tessier/File Photo

The two fund managers said the working prototype uses a tweaked version of the technology that first emerged as the system underpinning cryptocurrency bitcoin.

Over the past two years, financial institutions have increased their investments in the technology in the hopes that it can help make some of its processes more efficient. Potential uses range from systems to manage international payments, to programs to settle securities trades.

The pension fund managers’ “prototype is comparable to a pension administration system shared by all parties,” they said in a joint statement.

Employers, pension funds and regulators can each view and update information according to rules enforced by the network.

“This makes the storage of pension information secure and participants — at the push of a button — can see how much pension they have accrued,” the fund managers said.

The system appears more secure than existing pension administration techniques, and “significantly” cheaper to operate, they said.

PGGM manages 205.8 billion euros ($242.68 billion) worth of assets for clients, notably the pension fund for Dutch healthcare workers.

APG manages 456 billion euros in pension assets for Dutch government workers, among others.

They did not specify cost savings they expect from the new system or set a target date to begin actually using it to administer pensions.

Reporting by Toby Sterling, editing by Louise Heavens