​Norwegian Councils Band Together To Form €705m Pension Fund

Three Norwegian local authorities have formally decided to bring pension provision for all staff together into a single independent pension fund.

The move will create a single municipal pension fund managing NOK6.8bn (€705m), and will take NOK1.25bn away from the main municipal pensions provider Kommunal Landspensjonskasse (KLP).

The joint board of Viken county municipality – the new local authority being formed from Akershus, Buskerud and Østfold – resolved at a meeting on 23 March that it would establish its own pension fund for the three former municipalities.

Akershus Municipal Pension Fund (AFPK) announced on its website: “The supervisory boards of AFPK and Buskerud Municipal Pension Fund [BFKP] are requested to work as soon as possible with the aim of merging the two pension funds from 1 January 2020.”

Østfold municipality’s contract with KLP would cease on the same date, it said.

From the beginning of next year, all employees of Akershus and Buskerud who are members of AFPK, BFPK and KLP will become members of the Viken Pension Fund.

The Viken Pension Fund was a direct continuation of AFPK merged with BFKP, it said.

“Members of Viken Pension Fund will experience the same good personal service as in today’s AFPK and BFKP,” the Akershus fund said.

At end of 2017, KLP – which manages NOK675.6bn (€69.6bn) – had approximately 1,100 employees and 1,000 retirees from Østfold municipality among its customers. The premium reserve capital relating to them was around NOK1.2bn, according to Sissel Bjaanæs, director of information at the pension provider.

“We regret their decision,” she said. “KLP has had a good opportunity to argue for another outcome, so we respect their decision and wish Viken all the best with their pension scheme.”

She said KLP would work to make sure the transfer of these customers was smooth.

According to its 2017 annual report, the Akershus pension fund – then known as Akershus Interkomnuale Pensjonskasse – had NOK3.7bn in assets under management.

BFKP, meanwhile, had NOK1.9bn in assets under management at the end of 2017.

The map of Norwegian local authorities is changing considerably as a result of multi-year municipal reform, which is set to reduce the number of administrative regions.

One effect of the consolidation has been to create the opportunity for larger independent pension funds in cases where several municipalities are coming together as a single authority.