The Danish FSA (Finanstilsynet) is asking the country’s pension funds to begin reporting solvency coverage on a weekly basis, along with financial stress tests, in order to monitor developments in the sector as global stock markets plummet in response to the COVID-19 outbreak.
In a statement published this morning, the FSA said: “In light of developments in relation to COVID-19 and developments in the financial markets, the Danish Financial Supervisory Authority needs to monitor developments in the pension sector more closely and has asked the companies for reports on a weekly basis in the next month.”
The authority said it was requesting that pension funds report solvency coverage on a weekly basis together with a simple stress test, in order to calculate how the solvency situation would play out were the negative development in the financial markets to continue.
The firms are to send the data today and on the following four Wednesdays, according to the regulator’s edict. Information is to include a calculation of the solvency coverage on the day before the report as well as a calculation of what the coverage would have been that day, had share prices had fallen by 15% more and interest rates had risen by 25 basis points in the worst direction for solvency.
“If the company wishes to draw attention to special circumstances, this can be done as a continuation of the information,” the FSA said.
The FSA also said it was asking pension funds to report on market-rate pension plans, and the effect the downturn in the markets would have on customers saving with these products.
Specifically, the FSA said it wanted information on the relative financial effects on the customer’s savings between 31 December 2019 up to the reporting date, based on the savings of a 60-year-old and a 65-year-old in a company’s largest market interest rate product.