Providers of occupational pensions in Sweden will be able to change their pensions business into a new type of company under draft legislation published by the finance ministry, which implements the EU’s IORP II directive in local law.
Under the new rules, providers — including insurance companies as well as workplace pension savings institutions or friendly societies (tjänstepensionskassor) — can be converted into occupational pension companies (tjänstepensionsföretag), as long as they meet certain requirements.
The rules, which are proposed to take effect on 1 May 2019 and apply to firms that only offer occupational pension insurance, also allow for the fresh formation of new occupational pension companies.
The ministry said that in order to achieve stronger customer protection, the EU framework was being supplemented in Sweden with a strengthened set of solvency rules.
The proposal includes a risk-sensitive capital requirement for the new occupational pension companies in line with the capital requirement in the Swedish Financial Supervisory Authority’s traffic light model.
Finance minister Per Bolund said the government had taken IORP II as an opportunity to create “modern and independent regulation” that was adapted for Swedish companies.
“The purpose of the legislation is to enable effective management of occupational pension funds while providing future pensioners with adequate protection,” he said.
The proposed regulation implements IORP II, but is also based on a previous domestic report on occupational pensions (SOU 2014: 57), the ministry said.
The deadline for responses from stakeholders on the draft law is 12 October.
The bulk of Sweden’s occupational pension provision is run by life insurance companies, though a small portion comes from tjänstepensionskassor.
Insurance firms offering both occupational pension and life business have a choice of following Solvency II regulations for the whole business, or separating into two entities, including an occupational pensions entity following the newly-drafted rules.
Transitional rules for occupational pension business within insurance companies came into force two years ago and remain valid until 2019.