Consultation: New regulations on the management of the Government Pension Fund – Global

On 31 August, the Ministry of Finance submitted proposed new regulations on the management of the Government Pension Fund – Global to Norges Bank and the Office of the Auditor General for comment. The Ministry’s regulation of Norges Bank’s management of the fund is currently defined in three different sets of rules. The proposed new regulations combine all three into a single document.
 
In Report no. 20 (2008-2009) to the Storting, the Ministry stated that it would be reviewing the regulatory framework for the Government Pension Fund – Global with a view to producing a new regulation on the management of the fund to come into force on 1 January 2010. The proposed new regulations on the management of the Government Pension Fund – Global are based on the current regulations, but also impose a number of new requirements on Norges Bank.

The new requirements proposed in the new regulations on the management of the Government Pension Fund – Global include:

• A duty to prepare a strategic plan. It must describe how the bank intends to perform its management tasks, broken down according to the bank’s main deliveries to the Ministry of Finance: phasing in new assets, cost-effective exposure to the benchmark indexes, and active management.
• A proposal that supplementary limits be introduced for risk-taking in active management.
• A proposal that limits be set for leverage in the management.
• A proposal that the bank should control, measure and verify risk according to more parameters than is currently the case.
• A proposal that the bank publish its principles for setting pay.
• More extensive public reporting requirements, including information about pay.

In addition, rules have been proposed to regulate investments in the new asset class real estate.

It is not a requirement that the new regulations be circulated for comment, but the Ministry has nevertheless deemed it pertinent to carry out a public consultation process. An English translation of the proposed new regulations are available here. Any comments on the draft regulations should be submitted to the Ministry by 15 October 2009.