Supervision of the Earnings-related Pension Scheme
The supervision system for pension providers, as for other insurance activities, consists of the administration of the insurance provider, internal supervision systems and auditing, as well as external supervision.
Engaging in the insurance business is subject to license. The Council of State grants the license to an authorised pension provider. Company pension funds and industry-wide pension funds must have rules that are confirmed by the Financial Supervisory Authority, but no actual license is required. Pension providers founded by law include Keva, the State Treasury, the pension fund of the Central Church Fund, the Farmers’ Social Insurance Institution and the Seafarer’s Pension Fund.
The public supervision of private-sector authorised pension providers and the special pension providers of farmers and seafarers is handled by the Ministry of Social Affairs and Health and the Financial Supervisory Authority.
The Ministry of Finance supervises Keva and the State Treasury, while the Ministry of Education and Culture and the Church Council, subject to the general synod, are responsible for the supervision of the pension fund of the Evangelical-Lutheran Church.
The Financial Supervisory Authority supervises the authorised pension providers
Administratively, the supervision and inspection of the authorised pension providers is the responsibility of the Financial Supervisory Authority (FSA), the authority for supervision of Finland’s financial and insurance sectors and which operates in connection with the Bank of Finland. The FSA’s supervisory rights extend also to special pension providers, the Finnish Centre for Pensions and the investment operations of public-sector pension providers.
The FSA monitors and inspects that the pension providers abide by the law and good insurance practices and use proper procedures in their operations. In particular, the FSA supervises the development of pension providers’ economy and solidity. Furthermore, the Financial Supervisory Authority validates the rules of company pension funds and industry-wide pension funds. It also maintains a register of company and industry-wide pension funds and of insurance companies’ licenses.
When discovering an incorrect procedure, the FSA may reprimand the pension provider, exhort it to correct the problem within a set time limit or prohibit it from continuing the incorrect procedure. To sanction the exhortation or prohibition, the FSA may impose a conditional fine. The Council of State may finally restrict or revoke the pension provider’s license.
The pension provider is liable annually to submit to the FSA its financial statements, a report of its operations and state, compiled according to FSA instructions, as well as other necessary information. The FSA is entitled to conduct inspections in the pension provider’s facilities and participate in meetings in which power of decision is exercised. However, it does not have the right to participate in the decision making.