Believes KLP receives illegal state aid – E24
Storebrand believes that the pension giant KLP has received illegal state aid and that Norwegian municipalities and healthcare organizations have broken the rules for public procurement.
Pension company Storebrand has sent complaints to the European supervisory body ESA.
The two complaints claim that Norway gives the pension giant KLP illegal state aid, and claim that municipalities and healthcare organizations are breaking the rules for public procurement.
Since 2019, Storebrand has tried to establish itself in the market for municipal occupational pensions. There, KLP has a near monopoly, and was the only player in the market in the period from 2013 to 2018.
Although Storebrand re-entered the market in 2019, only three municipalities have put the occupational pension out to tender, and this forms the basis for parts of the complaint.
“In the period from 2019 to 2021, around 1% (!) of the municipalities have carried out competitions. The health organizations have not conducted any competitions,” they write in their complaint to ESA.
– When the municipalities do not go to tender, we want to clarify the situation. We believe there is an obligation to tender here, says Odd Arild Grefstad, CEO of Storebrand, to E24
Grefstad says that the municipal occupational pension market is NOK 60 billion a year, and that this is the largest purchase made by the municipalities.
– We do not perceive that there are any regulatory challenges here. Norwegian regulations facilitate good competition, and there are clear rules for public procurement, says Odd Arild Grefstad, CEO of Storebrand, to E24.
– This is a mega purchase, but municipalities simply do not go to tender.
The Ministry of Local Government and District Affairs confirms to E24 that they have received the ESA complaint, but has no comment beyond this.
Thinks everyone must put their pension on tender
In the complaints to the ESA, Storebrand claims that the municipalities and the health organizations are not allowed to let the pension contracts go on for a long time without putting them out to tender. They also believe that the pension offer to the municipality and the health institutions has in many cases changed so much since the contracts were entered into that a bid should have been carried out.
– This is the biggest purchase they make. They go to tender for the purchase of pens and pencils, but it is purchases such as pensions that really mean something financially, says Grefstad.
– How often do you think they should go out to tender?
– That can certainly be discussed. We see that normal practice is that a maximum of 8–10 years should pass before a purchase is put out to tender again. The normal is maybe 5 years.
Claims KLP “locks in” customers
The second of the two complaints claims KLP has received illegal state aid.
Customers of KLP are also owners of the company, and the customers put money into KLP for this. This is called contributed equity. This can be many hundreds of millions of kroner for each municipality or healthcare provider.
When KLP makes money from operations, this is included as earned equity.
Storebrand claims that if municipalities or healthcare organizations want to change pension providers, they will get back the contributed equity – but not the accrued equity.
This means that the municipalities and health organizations will give up money if they leave the pension giant.
Storebrand believes this leads to a “lock-in effect”:
“This gives municipalities and the health organizations an incentive to stay in KLP to avoid losing access to the earned equity”, they write in their complaint.
The complaint claims that every year KLP receives between one and two billion kroner from the municipalities, which contribute to the financing of KLP. They write that the equity is “tied up” and “generates profit” for KLP.
– This is state aid because it is municipal funds that have been brought in, and will be left behind. It is free capital for KLP, and constitutes a competitive advantage for them, says Grefstad.
At the end of June, KLP had NOK 19.7 billion in contributed equity, and NOK 21.5 billion in earned equity.
KLP: – Awaiting treatment
E24 has submitted the content of the complaints to ESA for KLP.
– We have not submitted Storebrand’s complaints about Norway to ESA. This will eventually be a matter between ESA and Norway, but we have understood that KLP has been mentioned, writes CEO of KLP, Sverre Thornes, in an e-mail to E24.
– On a general basis, we can say that we at KLP comply with the laws and regulations that apply to the business we run.
Thornes further writes that it is the municipalities that decide when to tender.
– In the tender rounds that have been held, we have worked hard to deliver the best offer. It will also continue to be included in the upcoming tender round, he writes.
– We would like ESA’s treatment and help to shed light on the matter if ESA or the state contacts us.
also read
KLP sent text messages during the municipal meeting: – Tried everything they could to avoid a competition
KLP under investigation
In March, E24 was able to say that the Norwegian Competition Authority is investigating KLP for abuse of a dominant position. Among other things, the inspectorate had carried out pension raids at the giant.
The investigation is still ongoing.
E24 also discussed how politicians in Bjørnafjorden municipality reacted to how KLP behaved when the municipality decided to put the municipality’s occupational pension out to tender.
Storebrand ended up winning the competition.
Do you have information about this case? We at E24 depend on tips from our readers. Contact E24’s journalist by e-mail [email protected]or by encrypted message via Signal or WhatsApp to +4799240017