Norwegian listed financial group Storebrand has won the tender process launched by the municipality of Bjørnafjorden to pick a provider for its employee pension scheme, taking the contract away from customer-owned institution KLP.

According to Storebrand, the municipal council of the west Norwegian region decided on 16 December to award it the contract. The scheme involves around NOK1.5bn (€148m) in assets under management and has 6,000 members.

The Nordic country’s municipal pensions market has opened up for competition in recent years after Storebrand re-entered following the introduction of a new public-service pension scheme, creating more options for local authorities besides belonging to the monopolistic KLP or setting up a pension fund of their own.

Only two municipal tender processes have now been completed this year – Øygarden and Bjørnafjorden – and Storebrand has won both of them.

Jon Hippe, head of public sector at Storebrand, said: “I would say that these two municipalities are leading the way in the pension market offering an example to follow for other municipalities.

“Hence, the attempts to prevent municipalities from organising tender process this has not been fully successful,” he told IPE.

Hippe said that in addition to these two municipalities, more than 20 companies with public occupational pensions had moved from KLP to Storebrand this year.

But he said that while the Øygarden tender process had been straightforward, his firm had seen a different process in Bjørnafjorden, with the municipality first having decided to move from a collective pension scheme within KLP to a separate investment portfolio from the same provider.

Hippe said this was “surprising”, adding that Storebrand had chosen not to offer this product because it gave the municipality too much financial risk.

When Storebrand asked for a detailed explanation from Bjørnafjorden, he said said the company was told KLP had made an error and the allocation to KLP had been cancelled.

Hippe said that though Storebrand had no details about the error, it had learned that when correcting it, the new analyses showed Storebrand to have the lowest price.

“Bjørnafjorden could thus have a guaranteed collective pension scheme in Storebrand at a lower price and with the same level of buffer capital transferred to their premium funds (premiefond),” he said.

Asked to comment on this and on the result of the Bjørnafjorden tender, Marianne Sevaldsen, executive vice president in charge of life insurance at KLP, said: “We think it would be disorderly if we were to comment on a process where the waiting period (karensperioden) has not yet expired.

“We are in dialogue with the intermediary to gain more knowledge about the municipality’s decision,” she told IPE.

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