The Swedish Finance Ministry has now granted the urgent plea from the country’s financial supervisory authority Finansinspektionen (FI) for pension funds to have special solvency leeway in their IORP II applications, given the impact of the COVID-19 outbreak on balance sheets.
The ministry released a proposal this morning for a new piece of legislation allowing funds to goa ahead with their conversions to the special status of occupational pension company (tjänstepensionsföretag) under Sweden’s domestic implementation of the EU directive – even if they fail to meet the solvency criteria at the time their conversion happens.
Publishing the bill, the ministry said the proposed transitional provision it was putting forward meant the requirements for occupational pension funds (tjänstepensionskassa) to be allowed to run occupational pension business as occupational pension companies) were being eased.
“The purpose of the transitional provision is that an occupational pension fund should not be denied permission to operate as an occupational pension company due to temporary failure to meet the risk-sensitive capital requirement caused by the prevailing market situation,” it said.
The ministry said the bill contained proposals for the kind of transitional provision that FI had requested.
At the end of May, FI wrote to the ministry asking for transitional provisions to be added to the law implementing the EU’s IORP II directive, warning that some of the funds could even end up in liquidation without these, because the pandemic’s effects on markets might make them fail capital requirements.
The new piece of legislation put forward today is scheduled to come into force on 15 December 2020.
On 15 June, media sector pension fund PP Pension announced it had become the first institution to be granted permission from FI to carry out occupational pension activities as of 1 July 2020 in accordance with the new rules, which came into force in December 2019.
Others that have applied include Sparinstitutens Pensionskassa (SPK), Kåpan and Svenska Kyrkans Pensionskassa.