Norwegian pension providers disagree on a basic aspect of proposed new rules for guaranteed pension products, with the Nordic country’s pension funds calling for separate treatment, while banks and insurers say all providers should be subject to the same requirements.
The divergence of opinion emerges from responses to the government consultation on the regulations on private guaranteed pension products, which closed yesterday.
Stakeholders have been consulted on a working group report distributed in September by the Ministry of Finance, which followed up a parliamentary request to look into changing regulations around paid-up defined-benefit pension policies to secure their value.
Among the points the Norwegian Association of Pension Funds (Pensjonskasseforeningen) made in its consultation response, published today, was an argument that its members should be subject to different regulations in this context from banks and insurance companies.
“Pension funds and life insurance companies are fundamentally different, with completely different risk exposure and company structure, and should consequently have different regulations,” the association said.
The body said that within pension funds, there was a convergence of interests between all parties, and beneficiaries had direct influence over management and regulation, adding: “The thesis of equal regulation of risk is therefore not accurate.”
Meanwhile, Finance Norway, in its concluding remarks in its consultation response said: “There should be the same rules for life insurance companies and pension funds, as the working group also suggests.”
The lobby group, which represents financial institutions including banks and insurance companies, added that even though there would be differences in how paid-up policies were managed between individual providers – be they pension funds or life insurers – “we have not seen that the trend reveals a need for different rules”.
The industry group said: “What the providers have in common is that they want to be able to provide the paid-up policy customer with the best possible management and thereby regulation.”
The Association of Pension Funds also said in its response that the new regulation had to safeguard the interests of pension beneficiaries, and that there should be no ceiling on the size of permitted buffer funds.
It said pension funds should be allowed to handle the buffer fund collectively, as per regulation for the price adjustment fund, and also called for a continuation of access to the use of amortised cost.
Finance Norway’s director of life insurance and pensions, Tone Meldalen, said it was positive that the government was looking at possible regulatory changes that could improve the management of paid-up policies.
In particular, she said the proposal to introduce borrowed equity would have a great impact on customers.
“It is the only measure studied that can provide better returns and higher pensions for customers, in line with the Storting’s (parliament) request,” she said.
The lobby group said that with borrowed equity, suppliers could take risks in a more long-term perspective.
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