The Norwegian Competition Authority (Konkurransetilsynet) has spoken out urging municipalities up and down the country to put their pension out to tender rather than sticking with monopolist KLP.
In a column for the newspaper Dagens Næringsliv, Gjermund Nese, department director for finance and communication at the agency, wrote: “The municipalities owe it to their inhabitants to choose the offer that is the most profitable overall.”
Nese said it was difficult to know just how much competition in the NOK500bn (€49bn) market could save the local authorities in terms of costs, adding: “But the potential is great.”
Since Storebrand re-entered the Norwegian municipal pensions market in 2019, he said, only two municipalities had moved their pension schemes – Vestland County Municipality and the new Øygarden Municipality, west of Bergen.
”It may cost Norwegian municipalities dearly to close their eyes to the opportunity that now exists to open their pension schemes up to competition,” he said.
He said the competition authority had no opinion on which providers municipalities should choose, but that the lack of tendering worried the agency.
The fact that Norwegian municipalities owned KLP – the NOK694.5bn mutual public service pension provider that dominates the market – could be seen as an argument for them to stay with the firm, he said.
“But it is not that simple,” he said, adding that all municipalities should put their pension schemes out to tender, as the various suppliers would compete to offer the best solution.
At the beginning of October, the municipality of Ullensvang kicked off a tender process for its occupational pension scheme, but newspaper Hardanger Folkeblad reported that later that month there were “scenes of jubilation” in the municipal council hall after the decision was revoked, according to Nese.
“One can wonder who the winners are. In any case, it cannot be the employees or the inhabitants of Ullensvang municipality,” he said.
At the beginning of October, Storebrand beat KLP to win the tender for Øygarden’s employee pension scheme.
But in November, KLP said in its interim report that most customers thinking about testing their options via a tender had eventually decided not to invite offers from other providers.