Norway Pushes Pensions to Up Investments in Domestic Private Equity

Norway

A report released by the Norwegian government encourages the country’s pension funds to increase their investments in domestic private equity; the country is looking to boost the financing of its more innovative companies.

According to the report, interest in domestic private equity has fallen rapidly in the last eight years.

From Investments and Pensions Europe:

Norwegian pension providers should increase their exposure to domestic private equity to improve the country’s growth prospects, an in-depth government report has suggested.

According to the productivity commission, the state should also recognise that regulation has acted as a barrier to competition in the provision of public sector pensions, with the report pointing to the departure of DNB and Storebrand, leaving only KLP to bid for local authority provision.

The commission’s initial, 542-page report will now be examined by the government before a second paper puts forward concrete reform proposals on how the Norwegian economy should adapt as the role played by the oil industry declines.

It noted that there had been a marked fall in interest from domestic private equity funds since 2007, when the industry agreed to 160 first commitments.

The figure fell to just 15 a year by the end of 2013.

[…]

It concluded that there was room for long-term investors, including pension providers, to increase their role in funding start-ups and small and medium enterprises (SMEs).

Read IPE’s interview with the chief executive of Norges Bank Investment Management here.

Does Knowledge Of Pension Reforms Affect Retirement Decisions?

balance retirement decision

If you knew your pension fund was in great shape, would it alter when you chose to retire? Conversely, if you knew your fund was in dire straits, would it increase the probably of working part-time during retirement?

Two Norwegian researchers set out to answer those questions. As published in the Journal of Pension Economics and Finance:

We present the results of a survey experiment where the treatment group was provided with an information brochure regarding recently implemented changes in the Norwegian pension system, whereas a control group was not. We find that those who received the information are more likely to respond correctly to questions regarding the new pension system. The information effect is larger for those with high education, but only for the most complex aspect of the reform. Despite greater knowledge of the reform in the treatment group, we find no differences between the treatment and control group in their preferences regarding when to retire or whether to combine work and pension uptake.

Read the entire paper here.

 

Photo by winnifredxoxo