The Norwegian parliament (Storting) yesterday approved new legislation changing the way private-sector pension providers manage buffer capital behind guaranteed pensions on its first reading.
However, there are indications that objections to one element of the new law will result in later tweaks to the rules.
The Storting announced on Thursday that it had adopted the government’s proposal for changes to the Company Pensions Act, the Defined Benefit Pensions Act, the Insurance Business Act and the Financial Supervision Act, in legislation referred to as “Buffer fund for private guaranteed pension products”.
The new bill, which aims to allow pension providers more flexibility in the way they back legacy defined benefit (DB) pension products, had received backing from the Finance Committee of the Norwegian parliament last week.
It is supported by both pension funds and life insurance company pension providers, though the pension funds lobby has argued against the imposition of a ceiling on buffer funds for pension funds for various reasons.
Parliament said in its announcement that it had “asked the government to set up a fast-working committee with representation from affected parties, with a mandate to look at possible rule changes to further secure the values and regulations of paid-up policies”.
Reservations were made for changes during the second hearing of the bill, it said.
Christer Drevsjø, chief executive officer of the Norwegian Pension Fund Association (Pensjonskasseforeningen), told IPE that during yesterday’s debate, parliamentarians had understood the message that the imposition of ceiling on the size of buffer funds would have a negative effect on pension funds.
“The government has now been tasked by the Storting to try to solve this,” he told IPE.
“It is felt that our message has reached the Storting,” he said.
Drevsjø also noted that during yesterday’s parliamentary debate, Kari Elisabeth Kaski, fiscal policy officer for the Socialist Left (SV) party, had introduced the idea of creating separate regulation on this issue for pension funds and life insurance companies.
“This is new – and positive food for thought,” Drevsjø said.