Storebrand ‘ready for mandatory schemes’
NORWAY - Norwegian financial group Storebrand says that it is prepared for next year’s introduction of mandatory pension schemes for employees in Norwegian companies.
The company made the claim in a statement accompanying its third-quarter results.
Third-quarter group profit was NOK318m (€40.7m), up from NOK265m for the same quarter in 2004. Storebrand Investments had assets under management of NOK177bn at the close of Q3 up NOK12bn since the start of the year and NOK5bn on the quarter.
In June, Norway’s major parliamentary parties approved a white paper based on the recommendations of a commission chaired by former finance minister Sigbjørn Johnsen. Draft legislation included a plan to introduce mandatory pension schemes from next year, and was tabled before September’s general election.
“The introduction of mandatory group pension schemes means that around 70,000 companies in Norway with a total workforce of between 500,000 and 600,000 will need to establish their own group pension scheme,” Nils Robert Hodnesdal of Storebrand investor relations told IPE.
“Based on the minimum contribution level set by the law, of 2% of a gross salary by an employer, this will be a market with an annual premium level of NOK3bn to NOK3.5bn starting in 2006,” he added. “And employees can also contribute up to 2% as well.”
“We have made contact with over 10,000 companies all over the country, and have held 40 pension seminars,” the company statement said. “We are seeing a good inflow of new corporate customers seeking to set up pension schemes for their employees.”
Premium income from the pensions side of the business for the first nine months rose 31% to NOK13.6bn, the company statement said.
“The premium growth rate was slightly down on the year-earlier growth,” Nils Robert Hodnesdal of Storebrand investor relations told IPE. “We sold a lot of short-term contracts on the individual side last year but this year we have placed some restrictions on some the individual products. We would like to see more sales of long-term contracts.”
The statement noted that Storebrand set up some 120 new defined contribution pension schemes in he third quarter, bringing the total for the first nine months to approximately 320.
Premium income from the new DC product rose 56% to NOK300m in the first nine months compared with the same period in 2004.
The statement added that Storebrand opened a branch in Stockholm in September to sell pension products in the Swedish market.
“We are moving into a niche sector of Sweden’s group pensions market, where employees are high earners and can make choices about how their pensions are managed,” said Hodnesdal. “We have a competitive edge here. We have already signed up four of five companies.”