A typical feature of the governance of earnings-related pension providers is that both the policyholders (employers) and the insured (employees) are represented in the administrative structures. The systems of governing the various types of pension providers have both similarities and differences. The Acts pertaining to each pension provider lay down provisions on their governance and on the tasks of various administrative bodies.

The number of administrative levels ranges from two in company pension funds to four in pension insurance companies. The table below shows the administrative bodies of the various types of earnings-related pension providers:

Industry-wide pension funds

Company pension funds Pension insurance companies Keva The Farmers’ Social Insurance Institution The Seafarer’s Pension Fund
Fund Meeting - General Meeting - - -
- - Supervisory Board Council Council Council
Board of Directors Board of Directors Board of Directors Board of Directors Board of Directors Board of Directors
CEO Administrator CEO CEO CEO CEO

The administrative levels shared by all types of earnings-related pension providers are the Board of Directors and the CEO (the Administrator in company pension funds).

Typically, the Board of Directors of an earnings-related pension provider has the following tasks:

  • responsibility for the administration and the proper organization of activities;
  • making decisions about the pension provider’s investment plan;
  • arranging and supervising accounting and asset management.

The CEO (the Administrator in company pension funds) is typically responsible for the pension provider’s day-to-day administration. The CEO (the Administrator in company pension funds) is appointed by the Board of Directors, with the exception of Keva, where the CEO is appointed by the Council.

Persons in the administrative bodies of earnings-related pension providers must typically meet certain requirements defined by law. Often these requirements concern, in particular, the Chair and Vice Chair of the Board of Directors. For instance, the Board members of pension insurance companies must be of good repute and must possess good knowledge of earnings-related pension insurance operations.

Special features in the governance of the various types of earnings-related pension insurers:

Industry-wide pension funds

Fund Meeting

The highest decision-making organ of an industry-wide pension fund is the Fund Meeting, attended by both the fund members (employees) and the shareholders (employers). The Fund Meeting decides, among other things, on the following:

  • adoption of the income statement and the balance sheet;
  • discharging the Board members and the CEO from liability;
  • amending the fund by-laws.

The Fund Meeting also elects the Board of Directors. The by-laws of the fund may provide that employers have the right to select a maximum of half of the Board members. Employers are not allowed to participate in the election of other Board members.

The fund’s executive officers must be of good repute. They must possess such general knowledge of the functioning of insurance funds as is considered necessary in view of the quality and scope of the fund’s operations.

Board of Directors

An industry-wide pension fund’s Board of Directors has a minimum of three members. In addition, the Board may have at most as many deputy members as there are regular members.

The Chairperson of the Board is elected by the Board, unless otherwise stipulated in the by-laws of the fund or unless otherwise decided when the Board is elected. The by-laws of the fund may provide that the Chairperson can only be elected among Board members elected by the fund members or shareholders.

Company pension funds

Board of Directors

In a company pension fund, the highest decision-making power rests with the Board of Directors. The Board has at least five members and at least five deputy members.

The employees insured with the fund select among themselves at least two members and at least two deputy members to the Board. The employees referred to here must be employed by the employer or must belong to the management.

The employer selects the rest of the Board members and their deputy members.

If, in keeping with the by-laws of the fund, the Board has more than five members, the by-laws must also provide that the ratio between the Board members representing the employer and those representing the employees is the same as the ratio mentioned above.

The Board elects its Chairperson, unless otherwise stipulated in the by-laws of the fund or unless otherwise decided when the Board is elected.

Administrator

The fund’s Administrator may also be elected the Chairperson of the Board.

Pension insurance companies

General Meeting

In a pension insurance company, the highest decision-making power rests with the General Meeting. The General Meeting elects the Supervisory Board and decides on the remuneration of its members. The General Meeting also adopts the pension insurance company’s income statement and balance sheet and discharges the Supervisory Board, the members of the Board of Directors and the CEO from liability.

Supervisory Board

The Supervisory Board is elected by the General Meeting. By law, the Supervisory Board must have representatives of both the policyholders (employers) and the insured (employees), who are elected among candidates proposed by the principal central organizations representing employers and wage earners. These representatives of employers and wage earners must have equal numbers, and together they must account for at least half of all Supervisory Board members.

The members of the Supervisory Board may not sit on the Supervisory Board or Board of Directors of another pension insurance company.

The Supervisory Board elects a Chair and a Vice Chair from among its members. One of them must be a person proposed by the representatives of wage earners. The Articles of Association may also stipulate that the General Meeting elects the Chair and a Vice Chair of the Supervisory Board.

The Supervisory Board’s tasks include the following:

  • election of the members of the pension insurance company’s Board of Directors;
  • confirmation of the remunerations paid to the members of the Board of Directors;
  • supervision of the company’s administration under the responsibility of the Board of Directors and the CEO.

The Supervisory Board may not be given any other tasks or the right to represent the company.

Board of Directors

The Board of Directors of a pension insurance company must have at least three members.

In the same way as the Supervisory Board, the Board of Directors must also have representatives of both the policyholders (employers) and the insured (employees), who are elected among candidates proposed by the principal central organizations representing employers and wage earners. These representatives must have equal numbers, and together they must account for at least half of all Board members.

The members of the Board of Directors may not sit on the Supervisory Board or Board of Directors of another pension insurance company.

The Board members shall be of good repute and they must have good knowledge of the earnings-related pension insurance system. The Board of Directors must also have a good understanding of investment.

The Board of Directors elects a Chair and a Vice Chair from among its members. One of these must be a person proposed by the representatives of wage earners. The Articles of Association may also stipulate that the Supervisory Board elects the Chair and a Vice Chair of the Board of Directors.

CEO

The CEO of a pension insurance company must be of good repute and must have solid expertise of earnings-related pension insurance, investment, and business management.

The CEO may not have a seat on the same company’s Supervisory Board or Board of Directors or work as the company’s principal actuary. Nor may the CEO sit on the Supervisory Board or Board of Directors of another pension insurance company.

Keva

Council

The highest decision-making organ in Keva is the Council, whose members are appointed by the Ministry of Finance for a term of four calendar years at a time. The term of the Council coincides with the municipal electoral term.

The Council is comprised of 30 members, each of whom has a personal deputy member. By law, four regular members and four deputy members of the Council are appointed upon the proposal of the main municipal negotiating organizations, and the rest are appointed upon the proposal of the Association of Finnish Local and Regional Authorities. When making its proposal, the Association of Finnish Local and Regional Authorities must take into account the municipal election result.

The Council is responsible, among other things, for the following:

  • electing the members and deputy members of the Board of Directors;
  • adopting Keva’s regulations;
  • deciding on the contributions paid by the member organizations;
  • discussing the financial statements and the auditor’s report, deciding on the adoption of the financial statements and on the discharge from liability;
  • approving the next year’s budget as the general economic guideline and approving the operating and financial plan for the next three or more years.

Board of Directors

The Council elects the Board of Directors for a term of two years at a time. The Board is comprised of nine members, each of whom has a personal deputy member. Two Board members and their deputy members must be elected from among persons proposed by wage-earner organizations in the municipal sector.

The Chair and Vice Chair of the Board are appointed by the Council.

The Board of Directors is responsible for the general supervision and steering of Keva’s operations. In addition, the Board decides on the plan concerning the investment of pension assets and discusses other issues that are important as matters of principle or that have far-reaching consequences for investment.

CEO

The CEO is responsible for Keva’s operations and finances. The CEO has two deputies, whose principal areas of responsibility are decided by the Board of Directors. Both the CEO and the Deputy CEOs have a public-service employment relationship.

The Farmers’ Social Insurance Institution (Mela)

Council

Mela’s highest decision-making power is vested in the 15-member Council, which is appointed by the Finnish Centre for Pensions.

The Chairperson of the Council is nominated by the Central Union of Agricultural Producers and Forest Owners (MTK) and the Vice Chair is nominated by the Finnish Centre for Pensions. Ten of the Council members represent the principal organizations looking after the financial interests of people insured with Mela. In addition, the Council has a member from the Ministry of Agriculture and Forestry, a member from the Ministry of Social Affairs and Health and a member from the Ministry of Finance. With the exception of the Chair and the Vice Chair, each Council member has a personal deputy.

The Chair or the Vice Chair must have good knowledge of earnings-related pension insurance.

Among other things, the Council:

  • decides on the general guidelines for Mela’s operations;
  • supervises the activities of the Board of Directors;
  • elects the members and deputy members of the Board of Directors, with the exception of the representatives of the Ministries;
  • elects the auditor;
  • discusses the financial statements, the report on operations and the auditor’s report and decides on any measures that these may warrant.

Board of Directors

Mela’s Board of Directors has nine members. The Finnish Centre for Pensions elects the Chair and Vice Chair of Mela’s Board of Directors; of these, the Chair is nominated by the Central Union of Agricultural Producers and Forest Owners (MTK) and the Vice Chair by the Finnish Centre for Pensions.

Mela’s Council elects four Board members who represent the principal organizations looking after the financial interests of people insured with Mela. In addition, the Board has a member from the Ministry of Agriculture and Forestry, a member from the Ministry of Social Affairs and Health and a member from the Ministry of Finance. With the exception of the Chair and the Vice Chair, each Board member has a personal deputy.

The Chair or the Vice Chair of the Board must have good knowledge of earnings-related pension insurance. In addition, the Board must be well acquainted with the pension provider’s operations and must have expertise in investment.

Among other things, the Board of Directors:

  • is responsible for Mela’s internal control and risk management system;
  • makes decisions on issues pertaining to the Mela coverage;
  • gives opinions and develops matters within its sphere of responsibilities;
  • appoints and discharges Mela’s CEO and other senior executives.

The Seafarer’s Pension Fund

Council

The highest decision-making power in the Seafarer’s Pension Fund is vested in the Council comprised of 13 members and their personal deputies. The Ministry of Social Affairs and Health appoints the Council for a term of three years at a time.

Two of the Council members represent the Ministry of Social Affairs and Health and one the Ministry of Transport and Communications. Of the remaining members, five represent employers and five represent employees. Of the employee representatives, one represents the crew, one deck officers, and one engineering officers.

The members representing employers and employees are nominated on the basis of proposals made by the organizations in the field.

The Ministry of Social Affairs and Health appoints one Council member to serve as the Chairperson and one to serve as the Vice Chair.

A person cannot simultaneously be a member of the Council and a member of the Board of Directors.

The Council decides on the general principles followed in the operations of the Seafarer’s Pension Fund and supervises the activities of the Board of Directors and the CEO. In addition, the Council is responsible for the following:

  • adopting the Fund’s financial statements and report on operations as well as the auditor’s report;
  • electing the auditor and deputy auditors, if any;
  • determining the remunerations paid to the members and deputy members of the Board and to the auditors.

Board of Directors

The Ministry of Social Affairs and Health appoints the Board of Directors of the Seafarer’s Pension Fund. The Board consists of five members and five personal deputy members.

A member designated by the Ministry serves as the Chairperson and, simultaneously, as a representative of the State. The Chairperson’s deputy serves as the Vice Chair.

Two of the other Board members represent employers, while two represent employees. Of the two employee representatives, one represents the crew and the other represents officers. The member representing officers is appointed for a calendar year at a time so that deck officers and engineering officers have a seat on the Board in alternate years.

The representatives of employers and employees are nominated on the basis of proposals made by organizations in the field.

Among other things, the Board of Directors of the Seafarer’s Pension Fund:

  • decides on the investment of the Fund’s assets;
  • gives opinions and makes proposals in matters pertaining to seafarers’ pension provision and its development;
  • appoints the CEO and other executives of the Seafarer’s Pension Fund;
  • manages the duties that have been assigned to the Board in the Act on reducing the solvency limit and covering the technical reserves of the pension provider.