Norway’s Askøy municipality weighs founding separate pension fund
The Norwegian municipality of Askøy is considering setting up its own, separate pension fund for employees, once its current arrangement with pension provider Storebrand comes to an end.
The local authority, which lies within the county of Hordaland around the west Norwegian city of Bergen, has put out a tender notice on the EU’s TED service, looking for potential service providers for a separate occupational pension fund.
Many Norwegian public sector employers have had to look for alternative pension fund provision arrangements for staff since commercial providers Storebrand and DNB Livsforsikring announced two years ago they were pulling out of the public service pensions market.
In the tender notice, Askøy kommune said its chief councillor was now preparing a case on the future provider of the occupational pension for employees.
The local authority currently has an occupational pension for its employees in Storebrand, it said, adding that the case would be decided by Askøy’s municipal council.
“The establishment of a separate pension fund will be a real alternative,” it said.
Askøy said it was inviting tenders for a turnkey system for a separate pension fund in accordance with the main tariff agreement in the KS (the Norwegian Association of Local and Regional Authorities) tariff area.
This is to include tenders for all the necessary liabilities and assets services, it said, with the exception of the manager, board and auditor.
The Askøy municipality pension scheme had 1,750 active members in 2014, and 650 pensioners.
Total premiums were NOK115m.
The local authority said the contract would be subject to two possible renewals, starting 1 January 2016.
It said it envisaged inviting three providers to tender.
The deadline for receipt of tenders or requests to participate is 13 April.
Following the exits of Storebrand and DNB Livsforsikring, the only external provider that will be left in the sector is Kommunal Landspensjonskasse (KLP).
KLP is the second-largest provider of public service pensions in Norway after Statens Pensjonskasse (SPK), and has been expanding rapidly over the last year as municipalities and other public sector employers transfer their existing schemes to it.
It has said it is taking in 150,000 new members as a result of the corporate exits by the end of 2014.
DNB Livsforsiking has blamed its decision to leave the public service pensions business on the tightening of requirements and regulations, and the intense competition that exists in the market.
Storebrand said it would have had to put a high level of investment into systems and processes to continue direct provision of public service pensions.
Earlier this month, KLP reported a 100% rise in contributions last year to NOK62.5bn in 2014 from NOK30.9bn the year before, as municipalities continued to transfer their pensions to the scheme.
In 2014 alone, KLP said 58 local authorities and 203 public businesses had transferred their pensions to it.
Some local authorities have already moved to set up their own pension funds, however.
Last October, Tromsø regional council in the north of Norway established the new Tromsø Municipal Pension Fund with 5,000 members and NOK2.5bn in assets under management.