Private-sector employers and self-employers have the option of taking out earnings-related pension insurance at the pension institution of their choice. The pension provider can be a pension insurance company, a company pension fund or an industry-wide pension fund.

Private-sector pension providers compete with each other and are in principle subject to competition law. The competition has the aim of enhancing the efficiency of implementation, improving services and increasing the returns on investments. In other words, policyholders and the insured reap the benefits stemming from competition. In contrast, pension contributions and benefits are defined by law.

The purpose of the earnings-related pension system is to secure statutory pensions. Promoting competition between pension providers must also be seen against this background. Statutory tasks, carefully regulated activities and shared liability in the event of bankruptcy are major factors limiting the possibilities of pension providers to compete against each other.

Law requires cooperation

According to earnings-related pension legislation, pension providers must cooperate in the preparation of insurance terms and calculation criteria, in the compilation of statistical data and in other matters pertaining to the implementation and development of laws concerning earnings-related pensions.

However, competition may not be limited any more than required by discharging the duties prescribed by law. Competition law prohibits undertakings operating in the same line of business from disclosing information comparable to business secrets to their competitors.

Well-being services as a competitive factor

Services promoting well-being at work, provided by pension insurance companies for policyholders, are an important factor in competition between companies. The aim of the services is to improve work ability. It reduces disability pensions, thus diminishing pension expenditure. Pension insurance companies play a key role in reducing disability. This role will be even more important when careers need to be extended.

Well-organized services aimed at reducing the disability risk can help companies to cut their expenses and strengthen the client enterprises’ competitiveness. This factor has become increasingly important for the success of businesses. For these reasons, the volume and contents of work-related well-being services play a major role when policyholders are selecting a pension insurance company.

The goals and contents of work-related well-being services have not been defined by law. The Financial Supervisory Authority has, however, issued more detailed guidelines concerning the expenses of work-related well-being services and how they should be recorded.