SPK criticises Sweden's 'inefficient' capital requirement proposals
Introducing capital requirements for Swedish pension funds – despite the European Commission’s decision not to include similar proposals within the IORP Directive – is “inefficient” and will result in an unnecessary cost burden for schemes.
Peter Hansson, head of occupational pension association Tjänstepensionsförbundet and chief executive at banking industry fund Sparinstitutens Pensionskassa (SPK), criticised the proposed new regulatory framework that seeks to establish two distinct regulatory arrangements – one for insurance firms and one for providers of occupational pension benefits.
However, Hansson’s complaint was not with the separate regime but with the capital requirements that would soon be imposed on IORPs as a result, despite the revised IORP Directive dropping similar considerations.
He questioned why the government would request that Sweden’s regulator Finansinspektionen (FI) put such a system in place “when the whole of Europe struggles with it”.
“I don’t see why we in Sweden should have a heavier impact than the rest of Europe – it seems very odd,” he added.
“Taking into account that IORPs are purpose-built, small organisations that should be super-efficient at handling pensions for members, there is no additional money you can draw on, so the impact would be an additional cost on pensioners.”
He said the new rules, effective from 2016 after the previous regime for pensions institutions (UFL) was phased out in 2011, was effectively an interim arrangement until the Commission amended the single market’s rules in a few years and that it would only lead to additional costs for all involved.
“I don’t see why it should be done if it’s delayed in Europe,” he said.
“I see it as a very inefficient way of doing something that is already taken care of under the traffic-light system.”
The current traffic-light system, less than a decade old, serves as a warning system to FI if pension funds experience asset price or rate volatility.
Hansson was nevertheless adamant the SEK24bn (€2.6bn) SPK would not need to change its asset allocation, only recently put in place after several years of work.
“We are well prepared,” he said.
“We have a solvency ratio of 140% – there will not be a problem for us.”
He added that it was “crystal clear” SPK was an IORP and would therefore register to become one of the new pensions vehicles proposed by the government.