Finnish association targets legal change to allow more private pension funds
The Finnish Pension Funds Association aims to increase the number of private pension funds and foundations, and get the issue on the agendas of the country’s political parties as they prepare for next year’s general election, according to its newly appointed leader.
The association’s incoming managing director Timo Toropainen, who takes up his role officially on May 1, told IPE: “I really hope we can change the legislative environment to make it possible to set up some new private pension funds and foundations.”
Toropainen will replace Pasi Strömberg, who has headed up the association since August 2011, when he leaves next month to become chief executive of private pension fund Verso.
The Finnish Pension Funds Association, Eläkesäätiöyhdistys, represents the private pension funds and foundations in Finland used by companies to provide mandatory occupational pensions instead of choosing one of the big pensions-insurance companies as the provider.
Toropainen said the advantage for employers in using a private pension fund or foundation was increased control over investments as well as potentially lower costs for well-organised funds or foundations.
Private pension funds and foundations manage around €5.6bn of assets in Finland compared to assets under management in the entire private pensions sector of €100bn.
“The most important task for me is to try to take care of the legal system surrounding us,” Toropainen said.
“The way the Finnish pensions market has developed, the amount of pensions money in our kind of pension fund and foundation has fallen,” he said, adding that he hoped to be able to change the legal framework to allow new funds and foundations to enter the sector.
With 12 months to go until the Finnish general election, all political parties were now thinking about how to prepare and position themselves for next year’s vote, he said,
“In this situation we have good chances of improving our position,” he said.
However, he said bringing about change in the law and the industry would be a long process and things would not happen immediately.
“But hopefully in the future during my tenure we will get there,” said Toropainen.
Toropainen comes to his new role at the association from 26 years as a political reporter and financial journalist, working at MTV News, Channel Four News and the Helsingin Sanomat.