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Norway’s financial services supervisor, Kredittilsynet, is consulting on its proposals to lower the minimum interest rate for new pension premiums from 3 per cent to 2.75 or 2.5 per cent. Interested parties are asked to make submissions by 4 November.
The proposals would cover assets relating to new life insurance and collective pension premiums from 1 January next year.
In a letter to umbrella organisations and industrial bodies dated 20 September, Kredittilsynet said: “It is in the perspective of solvency that we are obliged to the highest level of interest rates for insurance and pension companies.
“The choice of the minimum interest rates for Norwegian life insurance companies is affected by the rate of interest in the wider community and at times of low interest rates it is indefensible not to consider enhancing the solidity of pensions.”
Oslo-based consultants said that the change in the minimum rate could prompt companies to relocate their corporate pension funds to other jurisdictions, such as Luxembourg, under the terms of the EU pension fund directive.
The finance ministry in Oslo is also planning to make changes to the act governing Norwegian pension institutions in compliance with the EU occupational pension funds directive.
It is now expected that the law will come into force from 1 January 2007 rather than next January as initially hoped. Nevertheless, the EU pension directive has not yet been placed on the agenda of the monthly trilateral meeting between EFTA, the EEA and the EU.
The amendments will allow sponsors to negotiate a higher risk investment policy with their life insurance company or pension fund. However, sponsors would also be liable to make good shortfalls caused by asset fluctuations.
The current rules require 100 per cent funding but do not allow the fund or life insurance company to call on the sponsor to make good any shortfalls. LK
KLP, the Oslo-based insurance provider, has launched the final part of its four-pronged global equity fund, which has NKr4.2bn (e538m) of assets under management so far.
The funds, of which three are targeted at institutional investors and have minimum initial investments of NKr10m and NKr1m, will track the MSCI World.
“We have attracted more than NKr4bn worth of assets into funds and so far all of that has come from institutional investors,” said Mr Oksnes, a managing director at KLP. “The funds offer good diversification and we are pleased with the uptake.”
For ethical reasons the funds excludes 20 firms from the MSCI World. CN
