KLP has commented on its position in Norway’s newly-competitive market for municipal pensions, saying in its interim report released today that most customers thinking about testing their options had eventually decided not to invite offers from other providers.
In its third quarter report announcement, KLP said: “Several customers have considered putting their pension schemes out to tender this year.
“Good and close customer follow-up, low costs and good management, in addition to the benefits and predictability ensured by being an owner in KLP, have probably been decisive for most not choosing to put their pensions schemes out to tender,” the Oslo-based institution said.
The firm – the dominant provider in the country’s municipal pensions market – has been facing increased competition in the sector since Storebrand re-entered the market 2020.
Norwegian municipality Øygarden decided a month ago to switch from KLP, passing almost NOK1.7bn (€172m) of pensions business to Storebrand.
Storebrand has also gained the municipalities of Askøy and Vestland as customers, and manages pensions for more than 40 companies with public pension arrangements, including theatres, museums and other cultural institutions.
Posting results for July to September, KLP said it had made a return in excess of that guaranteed by the company to its customers of 1.1%, bringing the return so far this year to 5.6%.
Sverre Thornes, chief executive officer of KLP, said: “The result in the last quarter is characterised by rising interest rates and a somewhat positive stock market.”
Equities and alternative investments, which made up 27.9% of the common portfolio at the end of September, produced a 2.1% return on the quarter, KLP reported.
Of this, global equities generated zero, but the Norwegian equity portfolio returned 4.3%, the firm said.
Meanwhile long-term bonds and bonds held to maturity – an asset class with a 28.3% allocation at the end of September – returned 0.8% in the reporting period, measured at amortised cost, KLP said.
KLP added in the interim report that the total assets of its parent company increased by NOK1.7bn in the third quarter to end September at NOK694.5bn.
Last month, KLP responded to the loss of Øygarden as a customer by calling for a change in municipal pension transfer rules, with a spokesperson for the firm saying there could be factors other than price and quality that were motivating municipalities to change pension provider.