Finland’s pensions lobby groups – and most other stakeholders consulted – have told the country’s financial watchdog it has gone beyond its brief in its draft regulations interpreting changes lawmakers recently voted in to reform the pension system.
At the end of April, the Finnish Financial Supervisory Authority (Finanssivalvonta, FSA) published draft amendments to its regulations and guidelines on the administration of employment pension insurance companies (2/2017), which it said were necessary because of the legislative changes, labelled 194/2024, to the Act on Employment-Based Pension Insurance Companies – the recent pension reform package passed by the Finnish parliament in March.
Pensions alliance TELA, which represents earnings-related pension providers such as Varma and Ilmarinen, said: “The draft currently under review contains a large number of interpretations of the law.”
“Some of them, in our opinion, are clear and necessary clarifications of the law, while others go quite far from the original wording of the law or even attempt to replace it entirely due to the lack of statutory regulation,” the industry association said in its consultation response published today.
TELA said it thought it was good that the FSA was presenting its interpretations of the content of the law in advance.
“However, the FSA must be careful not to issue regulations without the authority to issue regulations,” the Helsinki-based association said.
TELA’s legal affairs manager Tiina Satti said one example of the FSA having gone too far concerned the expertise required of pension insurers’ supervisory boards, with the watchdog stating that the requirement was met if two-thirds of board members had expertise in employment pension insurance operations.
“However, we don’t believe this requirement could be given so precisely based on the wording of the law and its preparatory work, so it remains unclear what the Financial Supervisory Authority’s interpretation of the matter is based on,” she said.
Another issue TELA flagged up with the draft was its inclusion of an update of the regulations and guidelines regarding disability risk management – the activities of pension providers aimed at reducing the risk of employees becoming disabled and having to take a disability pension.
Satti said that since activities related to disability risk management were not currently regulated in more detail in the law, the FSA was having to make a very extensive interpretation of the law to form instructions.
The fundamental problem was the lack of legislation, according to TELA. “The goal of the earnings-related pension industry has long been to have the objectives of disability risk management defined in law,” Satti said.
TELA is by no means alone in its opinion that the FSA has gone too far in the wording of its draft rules, compared to the legislation it is based on.
Similar concerns have been voiced in their consultation responses by financial sector lobby group Finance Finland – which also covers occupational pension providers; by the trade union and employers’ organisations, as well as by the Ministry of Social Affairs.
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