The Finnish institutional investment market could next year see its first open pension fund/foundation performance tables comparing investment returns on the country’s largest schemes, following recommendations to be put to the government by the end of this year.
Henrik Lilius, senior officer at the Vakuutusvalvontavirasto, Finnish insurance supervisory authority, explains: “We haven’t any specific performance system at present. We are talking about this, and we could for example take the 20 best funds and publish their results. I think we might do something along the lines of the Dutch system.”
Lilius says the supervisory authority presently only looks at solvency issues from investment returns with the results taken from companies every quarter, and every six months from funds and foundations. And he says the authority is also looking at the issue of promoting competition between pension funds and insurance companies managing pensions in the country’s compulsory TEL system.
“Suggestions are also expected to be made by the end of the year about what kind of competition we could create inside the Tel system. One suggestion is that the employer should be able to switch more easily from one fund to another or from an insurer to a fund.
“Nowadays if an employer wants to leave an insurance company for a new fund it is possible, but the employer cannot transfer over the assets and liabilities – so this is maybe one area where the competition aspect is not good enough.”
Lilius says the system would be developed alongside a monitoring facility so that employers know the information received is fair. “Nevertheless, if you take the assets and liabilities from one place to another it is logistically difficult – so a company couldn’t do it every year. This is one method of making performance better because there isn’t any at present."
A working group is to report to the government at the year end.
Veso Puttonen, managing director at Finnish fund manager Conventum, comments: “The Helsinki stock exchange does give performance figures for mutual funds and pension funds, but you cannot see any other fund’s performance by name. It would be an excellent idea to have this kind of public fund performance list to open up the market and improve transparency.”
Tomi Yli-Kyyny, managing director at consultant Oy Porasto, adds: “I think this would make things more transparent which would be good, but at the moment funds don’t like to see their name in print. It is a good idea competition wise though. As time goes by it is inevitable that these changes will come into the market.”