It can certainly hurt a pension provider when investments go badly, but an organisation’s next steps in response to disastrous losses are vital.
Sweden’s biggest pensions firm Alecta appears to be doing its utmost to get the latter right.
Heads have rolled just a few weeks after revelations that it lost nearly SEK20bn (€1.8bn) on investments in three niche US banks. Displays of blame allocation could reassure savers that what happened will not happen again, but perhaps only if the right people are sent packing. In Alecta’s case, the first firing – that of its head of equity portfolio management, Liselott Ledin – drew cries of scapegoating in the Swedish media. Days later, CEO Magnus Billing was sacked himself.
Board member Ann Grevelius has stepped in to take over from Ledin, and Billing’s deputy, Katarina Thorslund is acting CEO.
Alecta chair Ingrid Bonde has become ‘working chair’. An internal investigation is not due to be completed before the summer, but Alecta has already announced a reduction in large foreign holdings, particularly in the US.
Efforts are being made to be open, notably by switching the location of the supervisory board AGM to a large conference venue.
A special post-AGM media briefing was broadcast live on national television.
The losses may not in themselves threaten an institution of Alecta’s size, but how it acts now to restore trust and learn lessons will be closely watched by Sweden’s financial regulator Finansinspektionen.
A negative judgement from the watchdog could force Collectum, administrator of the occupational pension plan ITP, to reconsider its recent renewal of Alecta’s mandate as ITP’s default provider. And losing that contract would be very serious for the pension provider.
Rachel Fixsen, Nordic correspondent