Mergers—both internal (for example, business units delivering specific products) and external across agencies—are one such transformation initiative being considered by Europe’s pension and social security community. One reason is that these organizations have typically evolved in silos. They are often segmented by the specific customer base they serve. What’s more, they are usually large and complex organizations that offer complex products to vast numbers of people.
The possibility of cutting through this complexity through a merger is of interest to agencies focused on cost, customer service and policy outcome improvements. A merger could mean two different pension schemes sharing and reducing operational costs. Customers benefiting from multiple products could interact with a single government agency. Governments encouraging citizens to work longer could integrate working age and pension support. There are potential benefits here, but also significant risk.
While mergers can reward organizations with cost, performance or outcome improvements, this is never without risk. In fact, Accenture research reveals that half of private sector mergers have failed to realize their expected value.1
In the pension and social security environment, the nature of risk is unique. These organizations are vital support structures with size and scale as well as tremendous political and social importance. It’s about the “daily miracle” of getting payments to millions of vulnerable people whose livelihoods depend on them. Any disruption to operations—like those that can come with mergers—can have serious consequences.
1 Accenture, Seven Catalysts for Merger Integration Success, Andy Tinlin and Alberto Vega