Big Norwegian companies seen moving to DC
NORWAY – Larger Norwegian companies are expected to shift away from defined benefit pension schemes towards defined contribution, says life insurer Storebrand.
It said there was a “definite change” in the market for DC schemes in 2003, after initial interest was limited when DC was granted the same tax advantages as DB in 2001.
“However in 2003 a number of larger companies elected to convert their existing defined benefit pension schemes to defined contribution schemes,” the group said in its 2003 annual report. At the start of 2004, almost 20,000 employees were in DC schemes run by Storebrand.
The company said it expected DC to account for a “significant part” of future growth in the pension market. The proportion of private sector employees in group pension schemes organised by their firms to rise from its current 43%.
The company’s asset management arm, Storebrand Investments, made a pre-tax profit of 22 million crowns in 2003, compared to a loss of 13 million crowns in 2002. “The improvement in earnings reflects good investment returns on portfolios with earnings-related fees and lower operating costs.”
Total assets under management was up by 19 billion crowns at 159 billion crowns. The firm added that Storebrand Investments is planning to offer its back-office functions as a separate product.
The company also commented on the recent report from the Pension Commission, saying that the debate on pensions will make the pension issue “a more important part of collective wage bargaining”.
“It is clearly not possible for everyone to retire early and still expect a good pension income – unless the working population is prepared to save significantly more than is currently the case.”