Norwegian municipal pensions giant KLP has lodged an official complaint about the way a recent public-sector pension contract was tendered – a process that resulted in the market leader losing business to its rival Storebrand.
KLP confirmed to IPE that it had sent a complaint to Vestland County in relation to a tender process which ended several weeks ago in the local authority opting to switch pension provider from KLP to the Norwegian financial services group Storebrand.
The win was the first for Storebrand since it decided to re-enter the market for municipal pension provision after competitive conditions changed with the advent of the new hybrid public-service pension.
Marianne Sevaldsen, executive vice president for life insurance at KLP, told IPE: “Yes, we have sent a complaint to Vestland County Municipality because we believe it is a violation of the procurement regulations that the alternative return on equity is set after the offer deadline.
“The complaint will be processed by the county municipality, and therefore we do not want to go into more detail on this for the time being,” she said.
The setting of the alternative return on equity relates to the comparability of returns from different types of pension provider. KLP is a mutual organisation, but Storebrand is not.
The Vestland pension scheme has 11,000 active and retired members and NOK3.7bn (€340m) of assets.
Jon Hippe, head of public sector at Storebrand, told IPE the company knew that the complaint had been made by KLP.
“As far as I’m aware, there is nothing in the way the tender took place that gives any grounds for complaint,” he said.
Hippe said Storebrand was communicating with the Vestland authority to shed light on the matter, adding that this coming Saturday was the last day that any objections to the tender process could be raised.
“We hope to sign a formal agreement next week,” he said.
In its interim report published this morning, Storebrand mentioned the Vestland mandate win, and said more Norwegian counties and municipalities were expected to put the management of their pensions out to tender, which could lead to further growth in the segment.