Storebrand positive to the proposed new occupational pension products
The Banking Law Commission's report NOU 2012:13 was handed over to the Ministry of Finance today. The Banking Law Commission has in this report assessed how the insurance based occupational pension products best can be adapted to the changes in the public pension system and the development in the labour and financial market.
Storebrand is positive to the proposals, which are well adapted to the reform in the public pension system and the new capital requirements under Solvency II. The products' tax treatment allows for good pension schemes for employees. The proposal gives increased flexibility and more predictable costs for employers compared to today's defined benefit pension schemes.
The capital requirements following the new products will be risk manageable. The products' zero guarantee reduces the investment risk, and the longevity risk is significantly reduced as a result of the life expectancy adjustment.
The Banking Law Commission's report will now be taken on a public hearing. The Ministry of Finance will then propose a bill to the Parliament. The new rules are expected to be implemented from 01.01.2014.
Further process
The Banking Law Commission will now begin the work on transitional rules. In the view of the Banking Law Commission it will in the interest of employees and the pension providers be required to avoid the issuance of paid-up policies when transferring from today's defined benefit pensions schemes to the new products. The Commission aims to finalise its work during winter 2013. Adjustments in the Defined-Contribution Pensions Act will be assessed in connection to this phase of the process.
Finance Minister Sigbjørn Johnsen said the following at the handover today: - My aim is that the Parliament will be able to adopt a comprehensive plan for the new pension product, which includes regulations on the transition from existing to new products, within the summer 2013.
Storebrand considers it important to find good transitional arrangements from today's products to the new, and this phase of the Banking Law Commission's work will be important for Norwegian occupational pension providers' possibility to adapt to the coming Solvency II regulations.
About the proposals in NOU 2012:13
The Banking Law Commission proposes two main models for occupational pensions: the standard modell and the basic modell. Common features of the two models:
- All-years principle
- The annual premium is set as a percentage of the employee's salary. Maximum limits of 7-8% of income below 7.1 G and 25-26% of income between 7.1 and 12 G.
- Mortality inheritance
- Annual zero guarantee. It is still possible to agree on investment choice without interest rate guarantee. Higher guarantees can also be decided on for a period of maximum five years, and within limits set by the Financial Supervisory Authority of Norway.
- Life expectancy adjustment of the pension payments through apportionment figures.
The main difference between the standard model and the basic model is that the pension funds in the standard model are regulated with salary inflation while the pension funds in the basic model are regulated with investment return.
Conference call
In connection to the release Storebrand is hosting a conference call today, Thursday 28 June at 15:00 CET. Presentation material can be found on our web site prior to the conference. To attend, please call +47 23 18 45 36 or follow the conference by using the link on www.storebrand.com/ir.
Lysaker, 28 June 2012
Contacts:
Communications Director Jan Otto Risebrobakken: Mobile +47 48 08 26 02
Head of Investor Relations Trond Finn Eriksen: Mobile +47 99 16 41 35
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.