03 March 2011

IPE: Overview of legislative and regulatory developments for pensions in European countries

Denmark
The government is preparing to implement the Solvency II regulation but the legislative timetable is unknown.

Finland
The law extending the emergency regulation to strengthen the solvency position of pension funds is now in force until the end of 2012. Legislation to introduce the first phase of solvency regulation is currently before Parliament and likely to be passed. The main change is to use a more accurate risk classification of bonds and loans in Finland’s risk-based solvency regulation. The second phase rules should come into force once the temporary emergency regulations have expired. The third phase rules will come into force in 2014 at the earliest. “In the Finnish statutory system, solvency regulation is based on national rules, so it remains to be seen how widely international Solvency II rules (or rules close to Solvency II) will be applied,” says Reijo Vanne, head of research, Finnish Pension Alliance.

Germany
The Federal Administrative Court has confirmed that the insolvency insurance liability, as well as the contribution liability under company pension law for direct pension promises, remains applicable, even if a complementary insolvency insurance in form of a pledged reinsurance is in place. This means that the level of premium cannot be reduced without changing the law.

The Netherlands
Supervision of pension funds is to be simplified following pressure from the regulators. Social affairs minister, Henk Kamp, has announced a new supervisory framework focusing either on a set of criteria, supported by the communications watchdog AFM, or on explicit rules, preferred by DNB.

Sweden
The new insurance business act (Försäkringsrörelselagen) has been passed by the Swedish Parliament (Riksdag). The legislation takes effect from April 1 2011, creating a new structure for friendly societies including tjänstepensionskassor, the Swedish equivalent of IORPs, as well as other older societies, mainly for funeral expense benefits. The changes will bring friendly societies into line with mutual insurance companies. The supervisory authority is preparing updating regulations to fit in with the new legislation, to be published at the start of May 2011. The ministry is seeking to comply with Solvency II, which will introduce a new risk-advanced calculation of solvency for insurance companies and occupational pension funds working within a life assurance framework.

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