Four of Sweden’s largest pension providers have urged the Ministry of Finance to regulate the occupational pension sector with a tailor-made framework rather than subject them to Solvency II.
Alecta, AMF, Folksam and Folksam’s local government subsidiary KPA outlined why the government should consider a new standalone regulatory framework, based on the current traffic-light system for assessing the financial stability of providers, rather than impose the insurance regulation on the sector from 2019.
The framework would formalise the traffic-light system used by regulator Finansinspektionen, which includes stress tests for equity, credit, interest rate, real estate and currency risks, while allowing the providers to maintain their current mark-to-market balance sheets, according to one of the signatories.
The industry shows that it is willing to accept risk-based capital requirements. It comes after plans unveiled in 2014 to allow for a standalone occupational pensions vehicle, with tailor-made capital requirements designed by FI, were resisted by the industry, as it was expected they would only be in force for a limited number of years until IORP II capital requirements were introduced.
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