History

As a result of weak financial markets KLP moves away from "all-inclusive" pricing to letting a special indexation premium finance the cost of indexing resulting from a pay and social security settlement. This makes it easier to build financial buffers and KLP is building itself up to be the financially strongest of the large life companies measured according to buffer capital .The Labour Court of Norway determines that the tariff regulation on gender-neutral and age-neutral premiums is to be used in the local authority pensions area. KLP's premium system becomes the industry norm and is incorporated into the Norwegian Insurance Act from 2004.

KLP considers conversion to a limited company. A proposal for conversion does not achieve sufficient backing at the General Meeting in 2004. KLP has the lowest administration and owners' equity expenses and can demonstrate higher added value for its customers than can competing life companies. KLP confirms its position as the dominant provider of local government pension schemes. In 2006 KLP establishes its subsidiary, KLP Bedriftspensjon AS, which offers defined contribution and defined benefit pensions to organisations that are not bound by the collective pay agreement on local government pension schemes. The pension reform is adopted, but the government proposes that the implementation of flexible uptake of the new retirement pension be postponed to 1 January 2011.

Following inputs from the major customer groups in the health sector KLP decided as early as 2001 to exclude tobacco producers from the investment portfolio. This was the start of corporate responsibility as a special matter at KLP. In 2004 we signed the UN Global Compact, an initiative from Kofi Annan to persuade companies to take responsibility for the environment, human rights, labour rights and anticorruption. In 2005 KLP published its first corporate responsibility report and in 2006 we had in place a special strategy for corporate responsibility.

In recent years KLP has invested more strongly in developing advantageous services and offerings for our owners' employees. In autumn 2008 KLP Skadeforsikring AS launched personal non-life insurance policies. As a result of the major challenges the financial crisis created, KLP had the opportunity to buy Kommunekreditt Norge AS and the final takeover happened in June 2009. In February 2010 KLP Banken (the KLP bank) was launched. The bank is specially aimed at members who have their pension schemes with KLP.

During the 1980s and 90s the company had returned the surplus from operation of the company to the local authorities in order to hold down the overall premium level. Just in the course of the first half of the 90s KLP returned NOK 3.6 billion to its customers. From the middle of the 90s, in connection with the financial crisis that struck a number of Norwegian financial institutions, the company changed its strategy. Now the emphasis is on building up solid financial buffers, thus enabling increased investment return. KLP expanded its insurance offerings to the local authorities by offering occupational injury and property insurance through KLP Skadeforsikring AS.

The company also became engaged in property for example through acquisition of Nora Eiendom, later KLP Eiendom AS, and unit trust savings through the companies KLP Fondsforvaltning AS and KLP Aktiv Forvaltning ASA. In 1999 the Storting gave the green light to KLP going into Norges Kommunalbank and buying 20 per cent of the shares from the state. Through the 90s competition over local authority pension schemes became fiercer. A large number of authorities have had their pension schemes out to tender, but KLP retains its strong position even though some authorities chose to depart from KLP's pension scheme.

At this time there was great political conflict about value adjustment of current pensions. KLP took the pensioners' side vis-a-vis the state and in due course achieved acceptance that pensions should be indexed to the National Insurance basic sum ("G"). In 1984 KLP expanded its product range with group life and accident insurance for local authority employees. From 1987 KLP was given the task of administering the Norwegian System of Compensation to Patients (Norsk Pasientskadeerstatning - NPE). KLP had also built itself up as a substantial lender so that the local authority sector was able to finance a range of important development projects. In 1985 the number insured had grown to 284,000 and total assets were about NOK 15 billion.

KLP was freed from Norsk Kollektiv Pensjonskasse in 1974, and received its own license as an insurance company. In 1975 KLP had 97,000 insured and total assets of barely NOK 2 million. In the middle of the 70s came the Transfer Agreement. The agreement ensures that local authority employees can change job from central to local government or between local authorities without losing pension entitlements.

In 1967 the Norwegian parliament, the Storting, passed a resolution to introduce National Insurance. This involved the local authority and state occupational pensions being coordinated with National Insurance. KLP experienced major progress through the 60s. First, there was a large increase in the number of local authority employees. From 1962 to 1970 the number of local authority employees increased by 50 per cent. In addition there were more and more local authorities joining KLP. This was connected with the parties in the local authority sector, with the trade unions in the lead, seeing occupational pension as a part of the pay and conditions agreement area.

During the early years after the war the local authority occupationalpension schemes were often much poorer than today with major variation from authority to authority. Employees' pensions were often seen as a luxury. The large urban municipalities had well ordered arrangements, but the rural municipalities lagged behind. The number of employees in the authorities was low. As late as the beginning of the 50s over half of the authorities had fewer than three employees - a factor that also hindered establishment of an occupationalpension scheme. By 1955 KLP had achieved 3181 pension-insured members distributed between 364 employers and total funds of over NOK 20 million. Annual premium was about NOK 7 million. In KLP's annual report for the year it was stated: "During 1955, 9 deaths have occurred amongst the insured in the pension fund. This results in pensions for 7 widows and 5 children."

Unique occupationalpension

KLP was established as a "managed" fund under Norsk Kollektiv Pensjonskasse in 1949. This collaboration continued right up to 1974 when KLP received its own licence as an insurance company. In the same year "Felles kommunal pensjonsordning" (the Joint Municipal Pension Fund) was established. The occupationalpension scheme was thereby administratively simplified and more equitable for its members. It distinguished itself from other occupationalpension schemes through having average premiums i.e. equal premiums for women and men - and younger and older employees.