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Nordic roundup: PFA, Oslo Pensionsforsikring, Bærum, Swedish Pensions Agency

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Denmark’s largest commercial pensions provider PFA has launched a new bid to shift customers out of traditional with-profits pensions and into its unit-link products. 

The DKK417bn (€559bn) pension fund informed customers in a statement they had a new opportunity to transfer their savings from traditional with-profits products to its unit-link product PFA Plus, involving new transfer rates.

PFA said it was now using a a new model to calculate transfer sums which accorded with new rules laid down by the Danish FSA, Finanstilsynet.

The company said it recommended that customers pooled their pension savings within the PFA Plus product, which it said gave a higher return at the same time as avoiding an administration fee.

Danish pension funds have taken various steps over the last few years to move scheme members towards unit-link products and away from the reserve-heavy guaranteed pensions. 

However, marketing methods have sometimes been criticised. 

In March, Sampension found itself the subject of a writ from the Danish ombudsman as a result of an individual case where marketing literature had persuaded a member to switch out of a guaranteed product.

Meanwhile, Norway’s Oslo Pensjonsforsikring (OPF) reported a slight fall in investment returns in the first quarter of this year as a result of weaker equities. 

Investment returns for customers fell to a value-adjusted 1.7% in the first three months of this year, compared with 2.4% in the same period last year.

The public sector pensions provider described the return as good, given underlying conditions, but lower than the year-earlier result because of weaker price rises on equities markets.

During the quarter, the fund’s asset allocation shifted away from bonds.

Fixed income assets represented 54.8% of the portfolio at the end of March, down from 57.1% at the end of December, and equities expanded to account for 22.0% of assets, up from 20.6%.

The property allocation increased to 22.2% from 21.8% 

Within equities, the proportion of assets held in quoted shares was 17.0%, down from 17.2% at the end of December, according to OPF figures.

The allocation to private equity rose marginally to 1.9% from 1.8%.

Group profit fell to NOK140m (€17.2m) in the first quarter from NOK147m in the same period a year before. 

Separately, the Norwegian municipality of Bærum has decided to establish its own pension fund, after testing the market for alternatives for the provision of the public service pension.

The main provider of the public service pension to municipalities in Norway is Kommunal Landspensjonskasse (KLP).

According to the Norwegian pension association, Pensjonskasseforeningen, Bærum decided last year to put its pension provision out to competitive tender, looking for offers for two alternatives — an insurance-based pension and a separate pension fund for the municipality.

After evaluating the offers received, the authority decided to establish its own pension fund, the association said. 

The new pension scheme will cover all of the municipality’s current and former staff including pensioners. It will have around 2,500 members. 

In other news, the Swedish Pensions Agency is to find options for changing the guaranteed pension so that individuals are encouraged to retire later.

The Swedish government has tasked the agency with investigating and analysing methods that promote later retirement for those with low pensions. 

The aim of the exercise is to ensure that people with low pensions will have better financial outcomes in terms of the guaranteed pension, housing and support for the elderly when they retire, it said.

The social security minister Ulf Kristersen said: “A longer working life leads to individual pensions being secured at a reasonable level, at the same time ensuring good welfare.”

The pensions agency’s work will be based on the report from the retirement age inquiry (Pensionsåldersutredningen) entitled ’Measures for a Longer Working Life’, the government said.

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