Bjørnafjorden in western Norway has decided to put its pensions management out to tender, becoming the third municipality this year opting to take advantage of increased competition in the hitherto stagnant Norwegian municipal pensions market.
According to a report in Norwegian specialist news service Kommunal Rapport, the municipal council in Bjørnafjorden in western Norway took a decision on Thursday evening to put the purchase of pension services out to tender.
So far this year, the municipalities of Øygarden and Ullensvang have decided to put their pensions out to tender, though politicians at a third – Ålesund – which had been weighing the idea, decided on Thursday not to launch a public procurement process after all, Kommunal Rapport said.
Norway’s main municipal pensions provider KLP has long had a virtual monopoly in the country’s municipal pensions market, but the re-entry of Storebrand to the sector last year has increased potential competition.
Earlier this month, politicians in Bjørnafjorden had been in doubt as to whether it would be possible to meet the New Year deadline for changing pension provider, according to the news report.
Terje Søviknes of the Progress Party (Frp) was reported as saying in last Thursday’s meeting: “The timeline is tight, but it can be implemented.”
He said the exercise could give the municipality a gain on its current account of around NOK15m (€1.5m) a year.
“That is a lot of money when we are faced with a challenging situation,” he said.
According to the case documents, Bjørnafjorden municipality could achieve a non-recurring gain of NOK80m by entering into a new agreement on the purchase of pension services, Kommunal Rapport said.
This NOK80m would be taken out of the KLP buffer fund, and would be able to be used to partially finance pension premiums in the years to come, it reported.
Managing pensions for more than 340 municipalities, KLP remains by far the dominant municipal pension provider in Norway, but Storebrand now has two significant customers in the municipalities of Askøy and Vestland.
Tempted back by the new hybrid public sector pension scheme, which carries lower solvency requirements than the previous scheme, two years ago both Storebrand and DNB announced intentions to return to the market for provision of local authority pensions, seven years after quitting the sector in 2012.
DNB, however, has since dropped the plan.
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