Plans approved for giant Norwegian fund fusion
NORWAY – Jørgen Kosmo, Norway’s minister of labour and government administration, has approved further plans for fusing the non-funded Norwegian public service pension fund, Statens Pensjonskasse (SPK), to the funded NOK100bn (e12.7bn) local authority pension fund, Kommunal Landspensionskasse (KLP).
The giant public service fund would have around 1.34m eligible members out of a total population of 4.5m.
The current timetable for the merger is set for January 1, 2003, due to complex issues on combining two huge funds that operate in different ways.
A spokesperson at SPK says: “ We are really hoping to see this merger come true, but it’s probably going to take one and a half years, or two years, maybe longer, who knows, before this can come true.”
The debate is mainly fuelled by the current transfer of the national healthcare system from the local authorities to the state, which would include switching the pension insurance of some 200,000 people from a funded insurance company scheme to the government pension fund.
The spokesperson adds: “ What they are trying to do is to merge SPK and KLP as one insurance company, which would also mean that SPK will become funded, today it’s a pay-as-you-go system. The main point is that a couple of hundreds of thousands of customers from KLP are switching over to SPK. Though it isn’t sure whether this will happen, which is why they try to go through with this merger.”
It hasn’t been decided yet, whether the proposed superfund will be run on a defined benefit or a defined contribution basis, according to SPK.
Around 850,000 Norwegians are currently eligible for membership in SPK, founded in 1917. Last year it paid out some NOK9.6bn, mainly in pensions.
Some 486,000 people have a right to participate in KLP pensions, which paid out approximately NOK4.1bn to pensioners last year. It has about NOK100bn of assets under management.
The ministry of labour and government administration has started working on the merger proposal already.