Occupational pensions The company that takes care of Finnish pensions came under the patronage of a supervisor a year ago – what exactly happened in Elo?

Finland The Financial Supervisory Authority (Fiva) made a decision a year ago that has never been seen before. The policy was so significant that it was finally approved by a board of non-Fiva decision-makers in December 2020.

Fiva’s trust in the management, board and supervisory board of Elo, which takes care of Finnish pensions, was over. The Financial Supervision Authority decided that the agent appointed by it would begin to supervise the management of the employment pension company – in practice, the company was placed under guardianship.

Elo himself opposed the whole decision and wanted to keep the backgrounds out of the public eye.

Read more: Employment pension company Elo and the Financial Supervisory Authority in a special dispute: The supervisor wants a lawyer to guard Elo’s management, but Elo opposes

What exactly happened in Elo, which takes care of the occupational pensions of more than 700,000 Finns?

Elon new CEO Carl Pettersson, 42, answers questions at the landscape office of the employment pension company ‘s head office in Tapiola. The new CEO, found in the employment pension company Veritas, has been visiting Eloo for almost three months.

“From my point of view, it was a series of events, a combination of events,” Carl Pettersson answers the question of what went wrong.

Pettersson refers to the spring of 2020, when it is the third largest in Finland the solvency capital of the employment pension company was below the level required by the supervisor after the collapse of stock prices.

“Everyone the solvency of employment pension companies fell, but Elo’s solvency was already the lowest in the industry. In this way, Elo had the shortest distance to the solvency limit, and it came against it, ”Pettersson explains.

Solvency refers to the ability of an employment pension company to meet its obligations to recipients of an employment pension.

Elo’s solvency was below the critical level on Thursday, March 19th. It at the latest aroused the Financial Supervision Authority.

“As the lower solvency limit approaches, the risk of the investment portfolio can, of course, be reduced and remain above the solvency limit. However, Elo’s risk control and internal control react too slowly, ”Pettersson continues.

Third the reason for patronage was the unclear division of responsibilities between the administration.

“In a crisis or challenging situation, it turned out that the division of responsibilities and decision-making did not work properly at the time,” says Pettersson.

One of the reasons for the shaky organization of the administration was that no deputy has been appointed to the CEO in Elo. In other employment pension companies, the Deputy CEO has been appointed – for example, in the event of a sudden departure of the CEO.

The company’s management team structure was unnecessarily complex. Different management teams did duplicate work.

Read more: The departure of Elo’s CEO Satu Huber was due to bad management – risk gambling with earnings-related pension funds collapses to the detriment of everyone

Life began improving its administration soon after the agent required by the Financial Supervision Authority came to the house a year ago in December. The agent was originally supposed to be in his wash until the summer of 2021.

Last June, however, it emerged that Elo had not made sufficient progress in resolving corporate governance problems. The Financial Supervision Authority wanted written plans from Elo’s Supervisory Board, Board of Directors and Management Teams to resolve administrative messes.

Among other things, the Financial Supervision Authority wanted to know how Elo intends to increase the expertise of management bodies in occupational pension matters. At the same time, Fiva decided that its appointed agent Pekka Jaatinen will continue to attend Elo’s Board of Directors and management meetings at least until next April – three times longer than previously planned.

Life received its response to the Financial Supervisory Authority in November. Helsingin Sanomat received them with a request for information to be read partially encrypted.

In his answers, Elo promises, among other things, to put 38 members of the Supervisory Board in training. Elo strives to improve the competence of the members of the Board of Directors by taking better account of investment competence in their selection.

“The Supervisory Board has two tasks. It appoints the board and oversees the affairs of the board and executive management. That is why internal reporting to the Supervisory Board will also be improved, ”says Carl Pettersson, President and CEO.

In order for the members of Elo’s Supervisory Board to take more responsibility for what they do, it is planned to reduce its size in the future.

Elo’s Supervisory Board includes the President and CEO of Finnish Entrepreneurs Mikael Pentikäinen, which considered merging Elo and other occupational pension companies in his writing a couple of weeks ago.

Pettersson says that Elo also intends to create a completely new management position related to risk management. It is the internal legal guardian i.e. compliancethe role of the director.

At the same time, the head of internal audit will also change at the beginning of January, when the previous director will retire.

“With these appointments, we will then start building and strengthening the internal control system,” Pettersson promises.

In its preliminary feedback, Fiva has considered Elo’s plans good.

Is a bigger organization grind yet?

“I’ve only been here for over two months, so first you have to learn, get to know and get to know this whole thing,” Pettersson says.

Is the previous CEO Satu Huber been involved in introducing you to the task?

“Not familiar. I received a congratulatory message from him wishing him luck and success. ”