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Finland: Financial Sector Assessment Program-Technical Note on Non-Bank Financial Intermediation and Pension Insurance Companies
Author:
International Monetary Fund. Monetary and Capital Markets Department
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2023: Issue 064
Language:
English
Publication Date:
01 Feb 2023
DOI:
https://doi.org/10.5089/9798400229893.002
ISBN:
9798400229893
ISSN:
1934-7685
Pages:
40
Keywords:
PIC equity investment; PIC asset allocation; Pension insurance company; pension insurance company Market; FSAP's finding; finance disclosure Regulation; investment allocation; Pension spending; Solvency; Pensions; Insurance companies; Insurance; Global; Europe
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This technical note evaluates non-bank financial institutions (NBFI) as a sector in Finland, with a special focus on the pension insurance companies (PIC). Pensions, including the PICs and fund managers, are the most significant parts of the NBFI sector, followed by insurance. Market participants value their relationship with the Finnish Financial Supervisory Authority, particularly during crisis periods, but noted that extra resources and expertise would be useful for the NBFI sector. The Financial Sector Assessment Program analysis reveals a history of procyclical and herding behavior in the PIC portfolios due to the substance and perception of the solvency regulations, which drive the behavior of market participants. Discussion on further reforms to the 2017 solvency laws should focus on enhancing the long-term purpose of the PICs to generate returns—to the benefit of all social partners and Finnish citizens. Even though liquidity risks are low, a liquidity regulation should be developed so that PICs have sufficient buffers for extreme events.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund