Pensions Elo manages Finns’ pension billions, the supervisor still doubts the company’s management’s ability to perform its duties: “Not enough progress” is not noticeable

The Financial Supervision Authority wants the occupational pension company’s supervisory board, board of directors and management teams to have “clear and concrete” plans for resolving administrative clutter.

About Elo, which manages € 27 billion in pension assets, has not made enough progress in resolving corporate governance problems. This is the view of the Financial Supervisory Authority (Fiva), which supervises occupational pension companies.

It wants written plans from Elo’s board of directors, board and management teams to resolve administrative messes this year.

Among other things, the Financial Supervision Authority wants to find out how the expertise of Elo’s management bodies in occupational pension matters could be increased.

The view of the Financial Supervision Authority is clear from a letter received by Elo’s board dated mid-June. In the letter, the Financial Supervision Authority justifies why Elo’s intensified supervision will be continued three times longer than planned.

Read more: The clutter of Elo, which manages Finnish billions in pensions, was revealed to be larger than expected, intensified supervision continues

Fiva recalls that the entities raised have been dealt with “in one form or another” throughout the term of Fiva’s agent, ie since December 2020.

“Nevertheless, considering the entities, the Financial Supervision Authority estimates that there is still no clear progress in resolving the problems concerning Elo’s corporate governance system,” the Financial Supervision Authority writes to Elo’s Board of Directors.

Among other things, the Financial Supervision Authority wants to find out how the expertise of Elo’s management bodies in occupational pension matters could be increased.

Elon the letter received by the government explains for the first time exactly why Fiva decided to continue working as an agent in Elo. Fiva’s representative who started in December Pekka Jaatinen has participated in the meetings of Elo’s Board of Directors and management, but decisions at them have been made by the company’s Board of Directors and executive management.

Jaatinen has made observations and brought them to the attention of the Financial Supervisory Authority. Among other things, it has been about finding out why the company’s board and other management acted according to Fiva’s assessment incompetently and recklessly in the spring 2020 coronary crisis.

Initially, Fiva had the opportunity to decide to terminate the position of agent in June 2021.

Financial supervision In its June letter to Elo ‘s Board of Directors, Elo explains that Elo’ s administrative problems concern the entire company, from the Supervisory Board to the ability of individuals in management. It is therefore appropriate to continue the role of agent.

The work of the Supervisory Board, the Board of Directors and the executive management is “closely linked through their interactions,” Fiva writes.

Poor governance is dangerous in the occupational pension sector. Customers other than Elo, ie employees and employers, are responsible for any losses caused by mismanagement.

There is solidarity between occupational pension companies, which means that when one company fails, the others are responsible for its obligations to occupational pensioners.

In the employment pension sector, employees and employers are responsible for any losses caused by mismanagement.

Financial supervision considers that there are still problems in three areas, namely Elo’s board of directors, board of directors and executive management.

The most authoritative of the problem entities is the Supervisory Board, which is responsible for supervising the administration of the company by the Board of Directors and the President and CEO. The 42-member Supervisory Board, which includes representatives of employees ‘and employers’ central organizations, elects the members and deputies of Elo’s Board of Directors.

Elo’s Supervisory Board is large compared to the Supervisory Boards of even larger pension companies.

Elo’s supervisory board is large compared to the supervisory boards of even larger pension companies. Elo’s Supervisory Board is headed by Ilkka Brotherus.

Elon The problems of the corporate governance system are related to the Supervisory Board’s ability and ability to perform its legal duties, the Financial Supervision Authority considers.

One concern is the competence of board members. For this reason, the Financial Supervision Authority wants Elo to have written plans, among other things, on how the access to information of the Supervisory Board and the training of its members will be implemented and maintained “to ensure sufficient expertise”.

In addition, Fiva wants to know what measures to take board of directors to implement the election of the members of the Board in the future. Fourth, Fiva wants written plans for the measures by which the Supervisory Board will in future monitor the administration of the company under the responsibility of the Board of Directors and the President and CEO.

Board of Directors EO’s board of directors has similar problems, the Financial Supervisory Authority estimates. Elo’s Board of Directors, like the Board of Directors of other employment pension companies, is large.

According to Fiva, it is a matter of the government’s ability and ability to perform its legal duties. Similarly, Fiva draws attention to the ability of Elo’s executive management to “perform their legal duties as individuals and / or collectively”.

According to the law, the board and CEO of an employment pension company must manage the company professionally, in accordance with sound and prudent business principles and the principles of sound administration.

In its letter, the Financial Supervision Authority states that the responsibility for actively detecting the necessary changes and taking corrective measures lies with Elo itself.

Satu Yrjänen, President and CEO of Kantar TNS, serves as the second Vice Chairman of Elo’s Supervisory Board.

Elon With regard to the Board of Directors and the Management Teams, Fiva expects written plans on, among other things, the following governance issues:

What is Elo’s Board of Directors doing to “clarify and enhance Elo’s management team and work group culture, which is unclear in terms of their mutual power and responsibilities?

How does Elo’s board of directors organize power and responsibility relationships clearly within management teams?

What is Elo’s Board of Directors doing to clarify the organization and operational possibilities of Elo’s internal control? How does Elo’s board ensure that the organization of these parts has sufficient competence and competence?

What is the board doing to clarify Elo’s reporting at different levels of the organization?

The Financial Supervision Authority has also asked Elo directly, among other things, for precise information on the participation of Elo’s Deputy Board members in the meetings.

The government of Elo Since 2017, the deputy members have been, among others, the chief economist of the Confederation of Finnish Industries Penna Urrila and CEO of Havu & Per oy Marjo Matikainen-Kallström.

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

Elon Chairman of the Board Antti Aho says that Elo develops the issues raised “smoothly” with the agent and Fiva.

“This is a long-term entity that we are promoting on schedule. We will answer all of Fiva’s questions by the deadline, ”says Aho.

“We will answer all of Fiva’s questions by the deadline.”

Still in December Elo opposed the appointment of an agent in full and still separately from the person proposed by the Financial Supervisory Authority, ie Pekka Jaat. Since then, the position seems to have changed.

“We’ve taken action and peel off. This is a process that is now being promoted in a good spirit of community, ”says Chairman of the Board Aho.

Pekka Kampman, Construction Director of the Business Foundation, is the first Deputy Chairman of Elo’s Supervisory Board.

Financial supervision sharpen the reporting format for the employment pension company Elo. According to Fiva, “plans must be clear, concrete and timed, and those responsible for their implementation must be appointed”.

Fiva will allow time for plans to improve the work of the Supervisory Board until the end of August and for plans to improve the work of the Board of Directors and the Management Team until mid-November.

Helsingin Sanomat also submitted calls to the Chairman of Elo’s Supervisory Board To Ilkka Brotherus, but he did not answer call requests.

The government also includes the labor market people

  • The boards of employment pension companies are different from the usual, because the decision-makers of employment pension companies are not only the owners but also the labor market people.

  • One third of the members of the board shall be elected from among the persons nominated by the central organizations representing employees, and at least one sixth from among the persons nominated by the central organizations representing employers.

  • The remaining members represent client companies or other stakeholders.

  • Eava’s Board of Directors is chaired by the CEO of Aava Health Services Antti Aho.

  • The first vice chairman of the board of Elo is the chairman of Akava Sture Fjäder and the other vice chairman is SOK, Senior Vice President, Human Resources, Finnish Cooperative Center Susa Nikula.

  • The Board also includes, among others, the Labor Market Director of the Technology Industry Minna Helle, Labor Market Leader for Finnish Entrepreneurs Janne Makkula and the chairman of the Trade Union Pro Jorma Malinen and the chairman of the trade union for services (Pam) Annika Rönni-Sallinen.

  • The board started in January 2020 as well Juha Koponen, who is the Chairman of the Board of insurance companies close to Elo in Lähi-Tapiola P&C and Lähi-Tapiola Life.

  • Elo’s Board of Directors has a total of 12 members and four deputies.

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