Supervision of the earnings-related pension scheme
The Ministry of Social Affairs and Health supervises the operations of the earnings-related pension scheme and related laws. The Financial Supervisory Authority (FSA) supervises private sector earnings-related pension providers. The Ministry of Finance supervises the public sector pension provider Keva, as well as the State Pension Fund. FSA supervises the financial planning and asset transfers of Keva.
The supervisory 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.
The Finnish Centre for Pensions supervises that employers takes out pension insurance for their employees and that the self-employed insure themselves. The pension providers also supervise their own employer-customers.
Engaging in the insurance business is subject to license. The Council of State grants the license to authorised pension providers. Company pension funds and industry-wide pension funds must have rules that are confirmed by FSA, but they do not need an actual license to operate. Pension providers laid down by law include Keva and the pension fund of the Central Church Fund, as well as the Farmers’ Social Insurance Institution and the Seafarer’s Pension Fund.
The Evangelical-Lutheran Church pension fund is supervised by the Church Council, which operates under the Ministry of Education and Culture and the Church Assembly.
Representatives elected by Parliament supervise the administration and operations of Kela.
- Ministry of Social Affairs and Health
- Financial Supervisory Agency (FSA)
- Ministry of Finance
- Ministry of Education and Culture
- The Church Council
The Financial Supervisory Authority supervises authorised pension providers
The Financial Supervisory Authority (FSA) supervises the authorised pension providers. FSA operates in connection with the Bank of Finland. Its supervisory rights extend also to special pension providers, the Finnish Centre for Pensions and public-sector pension providers’ investment operations.
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, FSA supervises the economy and solidity of pension providers. It confirms the rules of company pension funds and industry-wide pension funds. In addition, FSA maintains a register of company and industry-wide pension funds and of insurance companies’ licenses.
When discovering an incorrect procedure, 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, FSA may impose a conditional fine. The Council of State may finally restrict or revoke the pension provider’s license.
Each year, pension providers have to submit their financial statements to FSA, along with a report (compiled according to FSA’s instructions) of their operations and financial state, as well as other necessary information. FSA has the right to conduct inspections in the pension provider’s facilities and participate in meetings in which power of decision is exercised. It does not have the right to participate in the decision making.