6.3. VBPUO Protocol

Based on the article ‘Data-uitwisseling tussen vermogensbeheerders en pensioenuitvoerders’ (SIVI AFS Magazine December 2024)

The introduction of new legislation for pensions created a great need in the pension sector for a uniform method for data exchange between asset managers and pension providers. SIVI worked on a new standard for data exchange between Asset Management and Pension Implementation: the VBPUO Protocol.

The reason for this standard

Pension implementation organizations regularly need information from fiduciary managers and/or investment administrators (both asset managers) in order to be able to correctly carry out the participant administration of pension schemes. On the other hand, asset managers need information in order to be able to invest the premium/cash flow for various pension providers within the framework of the agreed investment policy.
The introduction of new legislation for pensions (Wet Toekomst Pensioenen, Wtp) requires a closer connection between fund assets and the collective administration of personal pension assets. As a result, information must be exchanged more often than before. In the current practice, pension providers and asset management parties mutually arrange the exchange of data. Due to the intensification of the exchange of data in a market with a great diversity of parties, standardization is desirable. Otherwise, the costs increase disproportionately.

Characteristics of the protocol

VBPUO provides for the standardized exchange of necessary information between pension implementation organizations and asset management parties. The complete protocol consists of 14 message types: 4 for the solidarity premium scheme and 10 for the flexible premium scheme (an explanation of these schemes is provided at the end of this paragraph). AFD 2.0 was chosen for this, as AFD 2.0 supports a broader financial domain – including pensions – than AFD 1.0, and AFD 2.0 is also the starting point for setting up web services within the SIVI AFS API framework.
In consultation with the sector, SIVI has drawn up AFD definitions for the 14 different message types using AFD Online Compose (AOS), the tool developed and made available by SIVI with which users can draw up AFD definitions for their services, products and messages themselves. SIVI makes the AFD definitions for this standard available via GitHub.
The core of all message types is a partyStructure with a party entity of entityType ‘pensionProvider’ at the highest level, as can be seen in the accompanying image. Below, the nested entities vary per message type from information about investments (investment.investmentDetails) to pension funds (party.pensionFund) and from investment pools for cohorts (pension.cohortPool) to tax data (financialInformation.tax).

Outside the scope of the protocol

Since VBPUO is limited to standardized data exchange between pension implementation organizations and asset management parties, matters such as allocation of returns to individual participants – the digital receipt – and investment policy, as well as information exchange between pension participant, pension provider and/or pension implementation organization are not part of this standard. The allocation of returns to participants will be taken care of internally by the pension implementation organization.

Standardization of transport

When developing the standard, the parties involved have chosen to standardize not only messages and data, but also the method of transport. A generic OpenAPI specification (OAS 3.1) is used for this purpose, which helps parties to exchange the message structures drawn up by SIVI in a uniform manner. This supports all parties that implement the REST service, promotes a uniform application of the REST API and increases adoption in the market. For now, the OpenAPI specifications have been drawn up based on the AFD definitions (JSON Schemas) of the 14 message types. In 2025, it will also be possible to draw up OpenAPI specifications within AOS, and SIVI will draw them up and make them available from AOS.

Next steps

At the moment, the parties in the sector are implementing the message structures in their own environments. Once the implementations are complete (probably early 2025), the parties can actually start exchanging data. The expectation is that the Standard PUO Asset Management will be widely embraced, especially now that DNB has made positive statements about standardization in the sector.

Maintenance and management

SIVI will manage the protocol in close cooperation with the pension industry.

Parties active in the pension industry

A great diversity of parties is active in the pension sector. The main division is between pension execution and asset management. The parties involved in this process are:

• Pension provider: pension funds, pension insurers, PPI (premium pension institution), and APF (general pension fund).
• Pension administration organization (PUO): administrator of pension schemes.
• Custodian: custodian of the managed assets of a pension provider. Independently determines the valuation and returns of holdings and investment portfolios/pools.
• Fiduciary manager (FM): responsible for the overall management of asset management, implementing the (strategic) investment policy of the fund in a broad sense. Various underlying asset managers can then be directed. The fiduciary manager will also maintain a (shadow) investment administration.
• Investment administrator (BA, asset service provider): independent party responsible for the investment administration of the pension provider. Often performed by the custodian.
• Administrator of cohort and investment pools (ACB): administers pools of (age) cohorts and investments.
• Broker (BR): executes investment transactions.
  

Solidarity premium scheme versus flexible premium scheme

The introduction of the Wtp has led to two types of pension schemes: the solidarity premium scheme and the flexible premium scheme. The information flows have been worked out for both types of schemes.

The solidarity premium scheme (SPR) is characterized by a collective fund capital and extensive risk sharing per age group. Part of the capital is reserved for the pension. Part of the collective pension capital is the solidarity reserve. This ensures, among other things, that the financial and longevity risks are shared.

The characteristics of the flexible premium scheme (FPR) are a personal allocation of capital. The participant can often choose how risky he/she invests his/her money. When the participant retires, he/she can opt for a fixed or variable pension. It is possible to create a risk sharing reserve to share risks with each other.