PFA, Denmark’s biggest commercial pension provider, has decided to shut down its Greenlandic subsidiary, taking away the Arctic country’s only locally based registered life and pensions insurer.

The DKK584bn (€78.5bn) firm said costs for customers of the unit, PFA Soraarneq, were high and set to become even more expensive because of regulatory and legislative changes.

Lis Hasling, managing director at PFA Soraarneq, told IPE: “The plan is to transfer customers in PFA Soraarneq to PFA Pension in 2017.”

The Greenlandic subsidiary would then close, she said.

“The final decision will be taken at a general meeting and has not been made yet,” she said.

Hasling said the supervisory and management boards of PFA Soraarneq had been discussing for several years what should happen to the company in the future to meet the increased demands from customers

She said it looked at various options in this context to secure the future of the subsidiary and the interests of its policyholders.

Under current Greenlandic regulations, customers of PFA Soraarneq would have to pay a charge of 45% of their savings to transfer them, and this charge is set to increase to 55% on 1 January 2017, Hasling said.

However, the Danish FSA (Finanstilsynet) would not approve a transfer that involved a charge higher than the current level of income tax, she said.

“We are therefore in the process of finding a solution to this,” Hasling said.

Greenland is an autonomous country within the Kingdom of Denmark.

The Greenlandic government has control over many areas including financial supervision and regulation, while Denmark retains control over foreign affairs, defence and monetary policy.

Unlike Denmark, it is not a member of the EU.

PFA Soraarneq is 76% owned by PFA and 24% owned by the association Foreningen Soraarneq, a group of workers and private-sector employers’ organisations in Greenland.

Its headquarters in the Greenlandic capital Nuuk, and it managed total assets of DKK1.06bn at the end of 2015.

PFA Soraarneq is the only registered life and pensions company in Greenland.

However, there is one Greenlandic pension savings institution that provides pensions for hourly paid workers.

Many people who work in Greenland choose to set up a pension in Denmark, Hasling said.