Swedish roundup: PP Pension, Storebrand, PIMCO, Folksam, Swedish Pensions Agency

SWEDEN - The collective surplus or buffer capital for PP Pension, the media pension fund, was 111.2% as at December 2010, up from 105.7% at year-end 2009.

The improvement will mean an increase to the bonus rate paid to members from 3% to 7%, retroactively from 1 January 2011.

PP Pension said the buffer capital increase was a result of good investment performance. During 2010, the fund returned 10.3%, with equities and real estate performing particularly well.

The collective surplus is the difference between the company's assets at their market value and the sum of the guaranteed commitments and allotted bonuses.

Meanwhile, the buffer capital at AI Pensions, the pension fund for architects and engineers, has been set at 6% for 2010 - the average for the life and pensions industry was 4.8% for the period.

AI pensions returned 8.7% for the full year 2010.

In other news, Storebrand, the Nordic pensions and insurance group, and PIMCO, the US investment firm, are jointly launching the PIMCO Emerging Markets SRI Bond fund.

Christine Tørklep Meisingset, head of responsible investment research at Storebrand's asset management unit, said: "Environment, social and governance (ESG) issues are fundamental to long-term investing. Knowing that business growth will be very strong within emerging economies going forward, it is important to adapt investments accordingly.

"The Storebrand Group has been active in the ESG/SRI space for 15 years. This initiative enables others to gain a globally diversified exposure toward emerging market bonds, while remaining compliant with strict ethical criteria."
 
The Emerging Markets Bond fund is a diversified portfolio consisting primarily of fixed-income securities from issuers in, or economically tied to, emerging or developing countries.

Assets may be denominated in US dollars or local currencies.

The fund is actively managed to maximise total return potential and minimise risk relative to the benchmark - the JPM EMBI Global, adjusted for SRI filter.

All investments will adhere to an SRI framework defined by Storebrand and implemented by PIMCO.

Meanwhile, Folksam, the pension and insurance provider, has joined a group of global institutional investors with assets totalling SEK480bn (€54bn) in a new gender-equality initiative.

The group of eight has sent a letter to 65 companies in 10 different countries, inviting them to participate in a dialogue about gender equality within the organisations.

According to a new study of 4,200 international companies, only 9.4% of board members are women - despite the fact several studies show companies with a higher proportion of women in leading positions achieve better and more stable financial results. 

According to Folksam, this has lead to investors identifying gender equality as a strategic investment issue.

All eight members of the group are signatories for the UN Principles for Responsible Investment.

Lastly, Pensionsmyndigheten, the Swedish Pensions Agency, has commissioned the country's financial supervisor to comment on the business of pensions advice.

The supervisor said there had been few complaints, but warned that advice could still be detrimental to clients.

According to supervisor's response to the agency, the main risk is that advisors will err on the side of too much caution to avoid unhappy clients.

It said: "The advisory companies probably have not much to gain by recommending high-risk funds because their commission is generally not linked to fund performance. By recommending speculative investments, the advisory company risks losing the customer if the performance of the recommendation is markedly down.

"On the other hand, returns that are just below the benchmark over time are unlikely to lead to customer exodus. However, over a longer period of time, lower returns can have a significant effect on the final pension payment."

The supervisor also highlighted the risk of advisory companies receiving commission from the companies they were recommending, and voiced its concern over the aggressive marketing tactics and vague and inaccurate information given to customers by advisors.