FINLAND - The Finnish minister for social affairs and health has confirmed the government intends to set up a working group to study the regulation and supervision of investments, including pension funds.

Liisa Hyssälä, the minister for social affairs and health, told a meeting of the Pensions Forum earlier this week the task force would examine the existing regulation and supervision of pension investments and highlight any possible need for changes.

The minister pointed out Finnish pension funds have been invested in Finland as well as the global investment market, and the latest information from the employee pension scheme is average yields on investments are "in accordance with predictions", albeit she warned pension funds should continue to be invested "productively and prudently".

However, Hyssälä said the current economic context meant the situation was "precarious" and sargued now is the time to "pay special attention to investment management and investment monitoring", ahead of the implementation of the new financial regime in 2009 when the Insurance Supervision Agency and the Financial Supervisory Authority will merge.

In relation to pensions, the taskforce will look at the investment regulation and how it fits with the recent pension reforms in 2007, while the minister pointed out a fixed set of controls may be required for the more complex investment instruments.

Hyssälä confirmed the working group would also reflect on the "ongoing financial sector worldwide crisis and its impact on the pension system", although the group could also conduct a rethink on the way the employee pension system could promote employment in Finland.

The minister revealed the working group will be expected to "closely monitor how the regulatory and supervisory frameworks are evolving in the European Union" even though the Finnish employee pension system is exempt.

In particular, Hyssälä said the group would follow the EU plan to implement Solvency II reform, as this "could also bring such regulatory and supervisory aspects, which should also take account of the employee pension system".

The decision to establish a working group on investment follows the Finnish government's earlier move in March to establish a regular Pensions Forum to monitor and assess the implementation of the 2005 and 2007 pension reforms. (See earlier IPE article: Pension Forum created to monitor Finnish reforms)

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