Press release 28 October 2019

Financial Supervisory Authority: Pension insurance companies must remain within their field of business

In its supervision release, the Financial Supervisory Authority (FIN-FSA) underlines that the disability risk management undertaken by pension insurance companies should be risk-based and within the field of business of statutory pension insurance, and that it must not be arranged on a competitive basis.

The activities of pension insurance companies play a key role in the implementation of statutory pension security and take place within strictly regulated limits.

Permitted management of disability risk is risk-based and restricted

Under current legislation, a pension insurance company’s disability risk management must adhere to the following principles:

  1. Joint measures with the client normally start after the pension insurance company has selected the client based on a risk assessment.
  1. The pension insurance company advises and informs its client in matters relating to disability risk. The pension insurance company helps the client company to understand the causes of disability risk and the reasons underlying disability. 
  1. When means to reduce disability risk are clear, the client may either implement the necessary measures itself or turn to an external service provider and purchase the required service. The pension insurance company may, based on its discretion within the limits set for this activity, provide the client with financial support for the management of disability risk.
  1. The pension insurance company may not carry out itself actual measures to reduce disability risk for the client. In other words, the pension insurance company’s activities do not include the provision of such services. In addition, the company’s activities do not include entering into with service providers agreements under which a service provider, funded by the pension insurance company, would carry out actual measures to reduce disability risk for one or more clients of the company. Agreements on such measures are between the client and the service provider.

The FIN-FSA monitors the measures of pension insurance companies as part of ongoing supervision. A sector-level audit of pension insurance companies’ disability risk management will be launched during 2020.

See also:

Supervision release 55/2019 (in Finnish)