New rules on transparency for private sector providers in Finland’s earnings-related pension system moved a step closer after the government submitted a bill to Parliament.

The Ministry of Social Affairs and Heath said that, when passed, the new law would require pension insurance companies to hold an insider register of board members and their substitutes, chief executives and their deputies, auditors and employees able to influence the company’s investment decisions.

Those on the register will be required to report their stock exchange holdings and business dealings.

The new governance law is set to come into force by 1 January 2015.

Pension providers will then have five months at the most to have an updated insider register in place, the ministry said.

Under the new rules, boards of the pension insurance companies will have to establish a set of principles of corporate governance. 

Chief executives and board members will not be barred from sitting on the boards of other companies, the ministry said.

However, the pension provider’s board will have to consider such involvement and the reasons why a membership on a board of an outside organisation is necessary, it said.

Conflict of interest provisions for directors and chief executives of earnings-related pension providers will be stricter than those applying to limited liability companies, according to the new rules.

Board members or chief executives will be unable to take part in negotiations of a deal if they are employees or members of a management body of another company involved in the deal.

Significant business transactions by the company’s management and management’s inner circle, such as home purchases, should be considered by the company’s board, and these transactions must be made public, the ministry said.

The proposed law also deals with reward systems at the pension insurers, stipulating they should serve the firm’s operations and objectives and be in its long-term interests.

“Reward systems should not encourage excessive risk taking,” it said.

The spotlight fell on pension fund governance in Finland late last year after a management scandal at the country’s largest pension fund, Keva.

Merja Ailus, then the managing director, resigned following media accusations that, among other things, she had charged the institution for some personal expenses.

Keva’s investigation concluded that its guidelines for fringe benefits were insufficient and that good corporate governance had not always been followed.