IPE Nordic Briefing: ​Iceland preps review of national pensions sytem

Iceland’s pension funds have been waiting for the government to produce a green paper on pensions for some time, keen for a review of national system as a whole which could pave the way for improvements.

In the meantime, elements of the system are being discussed publicly, including calls from pension funds to introduce automatic enrolment for Iceland’s additional pension savings scheme.

The scheme, under which employers top up employee contributions, was introduced in Iceland’s 1997 Pensions Act, but a recent study from the Central Bank of Iceland highlighted the fact that many workers fail to take advantage of it.

Another report from the central bank – which supervises pension funds – has got the funds talking by outlining changes it believes should be made to the sector’s legislative and regulatory framework.

The idea of harmonising some pension fund regulation with banking and insurance company law met with objections at a meeting the bank convened with the industry to discuss the report.

In Sweden, the risks for consumers around the growing market for pension transfers has prompted the financial watchdog to call pension firms to its offices to talk about the problem.

In the first quarter of this year, some SEK26bn (€2.2bn) of pensions capital switched from one provider to another, according to the Swedish Financial Supervisory Authority, which warned there was a danger this burgeoning trade “creates incentives to carry out transfers for reasons other than the insured getting a better pension.”

Meanwhile, Sweden’s Fund Selection Agency (FTN) is prioritising popular fund categories in its ongoing efforts to repopulate the country’s premium pension private funds platform with offerings it has procured itself – with the aim of improving quality, which includes lowering fees for savers.

Earlier this month it launched its biggest tender yet – for global actively-managed equity funds, a category in which there is currently some SEK200bn (€17bn) of assets belonging to around a million savers.

The agency then outlined its preliminary plan for next year’s tenders, involving five different categories of equity funds that currently cover around SEK250bn of assets. At this rate, the FTN is on track to have completed or initiated tenders for about SEK650bn of premium pension savings by the end of 2025 – which is roughly half the total savings invested in private-sector funds. 

Items to note:

• Danish statutory pension fund ATP saw a big pick-up in investment returns in the third quarter, even though it revealed it had made “extraordinary write-downs in private equity”. 
• The Norwegian Association of Pension Funds has told the country’s government it is positive about an official plan to back investment in entrepreneurs and start-ups – which could yield opportunities for pension funds – but warned that some regulatory burdens could make it hard for pension funds to make such investments.

Rachel Fixsen

Nordic Correspondent