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Swedish parliament approves buffer fund investment freedoms bill

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Sweden’s main buffer funds for the state pension system have obtained legislative approval for their revised mandate, which will open the gate for them to invest more in illiquid and alternative assets.

The Swedish parliament (Riksdagen) on Wednesday voted overwhelmingly to pass the bill placed before them, which changes the investment rules for AP1, AP2, AP3 and AP4.

Ossian Ekdahl, acting head of communication at AP1, said the Stockholm-based pension fund was pleased that the AP-funds Act had now been changed.

“It is good for both current and future Swedish pensioners,” he said, but declined to comment on how, and if, this would change AP1’s portfolio.

The legislation allows the four funds to put more capital into illiquid or alternative investments than they were previously permitted, and reduced the minimum portfolio allocation they must have to interest-bearing securities to 20% from 30%.

It also removed the current requirement for the funds to use external managers for a proportion of their assets.

In addition, the law introduces the objective for the funds to manage pensions assets in a way that contributes to sustainable development.

The plan to liberalise the funds’ investment rules has been under discussion for several years in various shapes, also forming part of the proposals aired in the wide-ranging buffer fund reform that was ultimately shelved three years ago.

The new rules will take effect on 1 January 2019, according to information from the Swedish parliament.

Members of the Riksdag from nearly all of Sweden’s many elected political parties voted in favour of the bill; the socialist Left Party (Vänsterpartiet) did not.

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  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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