Finland has a collection of pension companies that are set up by a very special law. The law creates some nice barriers to competition – there are no foreign-owned companies here involved in this state sponsored pension system after decades of having “an open house” as the Finnish incumbent pension companies like to say.
In fact, the three biggest companies run the show, and “Heaven Forbid” if anyone writes or says anything negative about this nice little business cartel.
Under this law every company has to register their workers with a pension company.
Under this law every worker has to contribute every month around 5% of his gross salary to that pension company. He or she does not make that payment themselves. No, the employer pays it directly to the pension company alongside the employer’s contribution of almost 20% of the gross salary. So an employer’s salary commitments exceed 120% of the actual salary received by the worker.
The employer is a “cooperative member” of the pension company. If his company is big enough, he may get a position on the board of the pension company with a lot of great meeting fees. They also have lovely log cabins and other retreats in Finland (Lapland is full of them…) where they can discuss strategy over a beer or two…
The costs of these pension companies are high because they need to spread out the goodies to senior trade union members and the employers’ associations to ensure full support from everybody in running this business. They have hundreds of these people in various committees… an expensive but efficient lobby system.
The big Finnish companies get the main board positions and the pension companies who are also investors in these same companies with their pension funds, get to sit on their boards by way of reciprocity.
… and surprise, surprise some board members can actively participate in each other’s remuneration committees and award each other fat bonuses and supplementary pensions running into hundreds of thousands of euros when they retire at 60 years old, exhausted from their heavy burdens.
Asked if ordinary workers need supplementary pensions, the pension companies say, “no, not really…”. They actually say that workers should pay more for their pensions each month because there is not enough money in the pot to pay all these workers’ pensions who will receive around 50% of their last salary when they retire.
By the way, if the pension companies did a good job and kept costs to a minimum, which they do not, the ordinary worker should be getting some 90% of their last salary if they have worked 40 years or more. But the pension companies will immediately, and in chorus, deny this fact as an alt-truth…