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The Norwegian market is braced for a flurry of regulatory activity in 2006, beginning with the introduction of obligatorisk tjenestepensjon (OTP), which will require private sector employers to offer their workers a group pension plan from January.
Kredittilsynet, the Norwegian financial services supervisor, has also launched regulations covering cross-border pension activities as set out in the European Commission’s pan-European occupational pension fund directive. In addition, the country’s ministry of finance expects that the proposal to establish onshore hedge funds in Norway will be discussed by the parliament next spring.
Hanne Myre, head of the pension and insurance department of Kredittilsynet, told nrpn that the new regulations on cross-border pension activities will cover the taxation of collective pension schemes and the regulation of defined benefit (DB) and defined contribution (DC) pension schemes from January 2006.
“According to the new laws, foreign insurance companies that undertake a pension fund for a Norwegian company and operate it abroad will have to follow the same rules as Norwegian insurance companies,” said Ms Myre.
The premium will be tax deductible even if offered by a foreign insurance company abroad. Foreign companies will also have to follow Norwegian regulations on DC and DB schemes.
“From January 2006 all employers will have to offer their employees a DC scheme with a minimum contribution of 2 per cent of their salary. Alternatively companies can offer a DB plan, but they must make sure it is on the same level with the DC plan. Foreign pension funds will also have to follow this regulation when offering funds for Norwegian companies,” Ms Myre explained.
From January 2006, it will also become possible for funds to offer both unit-linked and traditional insurance products. At present Norwegian companies must register different entities to offer these products.
As of 1 January 2008, a further set of regulations will be introduced to oversee the pricing of insurance products. These will stipulate that a company has to set a specific price and charge separately for interest guarantee and for administration costs. “Furthermore, if there is a yield surplus, the companies will have to pay it to their customers,” said Ms Myre.
According to Erling Rikheim, deputy director general at the Norwegian ministry of finance, the proposal to establish onshore hedge fund regulation in Norway is also likely move forwards in 2006.
RC
