The groups will look at investment rules as well as consider how to proceed after temporary solvency regulation for private sector pension schemes runs out in 2010.

Like other European countries, the Finnish parliament has introduced temporary solvency rules aimed at ensuring that pension providers will not have to sell off their assets to protect their solvency position.

“This temporary legislation is really crucial for the portfolios of private sector pension institutions,” said Matti Leppälä, director of the Finnish Pension Alliance, Tela.

“The sooner the government and the social partners have an idea of the rules post-2010, the better. The longer it takes before we know whether the temporary legislation will be extended, and in what shape, the more difficult it will be for the pension industry as a whole. We understand that it’s a complex issue, but we’d like to see it decided as soon as possible,” he added.

The two working groups include an ‘expert group’, with representatives from the social partners and the pension industry; and a broader group drawing on stakeholders. The latter is chaired by ministry director Antero Kiviniemi, while the former is led by Lauri Koivusalo, a judge and former Etera manager.

The ministry has asked the working groups to report back in March of next year, while the temporary solvency regulation runs out at the end of 2010. This puts the groups under considerable pressure to reach an agreement.

Whether they will be able to is by no means certain, especially in light of events earlier in the year when the government broke with the long-standing tradition of making social policy on the basis of tripartite negotiations, and instead single-handedly announced that it would increase the Finnish retirement age from 63 to 65, effective from 2011.

The outcry that followed forced the government to back down and return to the negotiating table. It is also part of the reason why the formation of the two working groups took so long. While that relationship appears, for the moment, to be mended, it remains to be seen what will be done with the conclusions of the working groups.

“Ultimately, it will be a political decision as to what the actual legislation presented to parliament by the government ends up looking like. But we trust that pension policy will be made based on negotiation and agreement with the social partners and in co-operation with the government,” said Mr Leppälä.

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