Denmark’s Financial Supervisory Authority (FSA) has issued formal orders to IBM Pensionsfond in Denmark after discovering that assets intended to cover liabilities were also pledged as collateral for derivative transactions. The FSA conducted an inspection in March on the US multinational’s defined benefit pension fund for Danish employees, focusing on investments and registered assets. A company pension fund must have enough appropriate assets to cover pension provisions, the FSA stated. The pension fund’s investment focus was to generate enough return to cover obligations and maintain solvency against financial and non-financial risks. The FSA found that the pension fund’s register included assets pledged as collateral, leading to an order for IBM to calculate registered assets excluding encumbered assets. As of the first quarter of 2024, there were sufficient assets on the register to cover pension provisions after deductions for encumbered assets. The FSA also ordered the pension fund to ensure guidelines and procedures support continuous calculation of registered assets without encumbrances to satisfy members and beneficiaries. IBM in Europe has been contacted for comment on the case.
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https://www.ipe.com/news/ibms-danish-pension-fund-rapped-by-fsa-for-using-key-assets-as-collateral/10074554.article
