Emergency legislation on pension fund solvency – which has been drawn up but not yet enacted – is not needed for now, said Finnish pensions alliance TELA, because occupational pension providers’ financial situations have improved since the depths of the pandemic crisis.

However, Finland’s financial regulator has announced it will continue with the intensified reporting schedule it put in place for pension funds this spring.

Hanna Mäkinen, mathematician at TELA, the lobby group for providers in Finland’s earnings-related pension system, said: “In the light of the latest solvency figures, it does not seem that there is a justified need to pass a bill right now.”

At the end of April, following a phase when falling asset prices had dented pension fund solvency ratios, the Finnish Ministry of Social Affairs and Health prepared a bill on the temporary strengthening of pension insurers’ solvency, which parliament could pass at short notice if average solvency took a sudden dive.

It was a precautionary measure to avoid pension insurance companies being forced into selling equities at depressed prices.

At the end of both April and May, the average solvency position of employment pension companies, pension funds and foundations was up from its 1.5 low at the end of March, and stood at 1.6, TELA reported – though it noted this was still below the 1.7 level of the end of 2019.

“The most acute crisis in the financial markets was experienced in March, and the situation has since calmed down somewhat,” said Mäkinen, in a written commentary.

“However, as it is difficult to predict the progress of the coronavirus crisis, the situation in the financial markets may change very quickly,” she warned.

“It is therefore a good thing that the legislation has been prepared so that it can enter into force quickly if necessary,” Mäkinen said.

Meanwhile, the Finnish Financial Supervisory Authority (FIN-FSA) announced it would continue to collect occupational pension company solvency data according to its condensed schedule, with providers to submit the next monthly sets of information by 8 July and 10 August.

“The Financial Supervisory Authority may increase the reporting interval if the situation in the investment market changes,” the regulator said.

FIN-FSA also said pension providers had to review the fair value of any real estate investment object if there were indications of a significant decrease in its value.

Last week, Finland’s Finance Ministry said it expected the economy to contract 6% in 2020 because of the pandemic, but said the lifting of specified COVID-19 restrictions at the start of June would bring growth in the consumption of services in the third quarter of this year.

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