APG Asset Management completed the testing of a blockchain-backed pension administration application developed jointly with PGGM, APG said in a news release Monday.
Following the successful completion of the first phase of the study, the two Dutch managers will continue to research the prototype involving blockchain technology, which was launched in efforts to produce a low-cost transparent administration system for plan participants of the €394 billion ($466 billion) Stichting Pensioenfonds ABP, Heerlen — managed by APG — and the €185 billion Pensioenfonds Zorg en Welzijn, Zeist, which is managed by PGGM.
The prototype developed by APG and PGGM uses smart contracts, the self-executing contracts programmed to distribute data to specified users. Distributed ledger technology, the application it is built on, enables the firms to store pension information "in the nodes," APG said in the release. These nodes are points in the network representing pension providers, employers and regulators, the money manager added.
"By investing in smart applications, such as blockchain, we make our pension administration simpler and cheaper over time. This is good news for pension funds and their participants," said Wim Henk Steenpoorte, member of the APG's executive board.
Paul Boomkamp, chief financial and risk officer and member of PGGM's executive board, added in a news release: "With this experiment, we are building the pension infrastructure of tomorrow for our clients and their participants. Ultimately, this experiment has to show that blockchain technology has the potential to manage a policy administration at lower rates."