Sweden’s biggest pension fund has this morning been slapped with a SEK50m (€4.7m) fine for failings over its high-profile loss-making investment in residential property firm Heimstaden Bostad – and given an official warning in censure that Alecta says it agrees with.
Publishing a 49-page decision at the end of its investigation into the matter – which has been running since 2023 – the Swedish Financial Supervisory Authority (Finansinpektionen, FI) said: “Overall, FI concludes that the investment risk has been higher than in real estate investments in general and that Alecta has disregarded the legal requirements that applied to the company’s investment activities by making the investments.”
“FI has decided to give Alecta a warning and a sanction fee of SEK50m,” the authority added.
FI said its investigation into whether Alecta had complied with the rules in connection with investments in Heimstaden Bostad showed the pension fund had failed in its risk control and had not invested the assets in the way that best benefited current and future pensioners.
The authority said Alecta had so far invested approximately SEK50bn in Heimstaden Bostad – whose largest shareholder is Swedish listed property firm Heimstaden, controlled by Norwegian billionaire Ivar Tollefsen – and that FI had reviewed a number of the investments, which were made between 1 October 2019 and 31 August 2023.
“Alecta entered into a shareholder agreement with other owners of Heimstaden Bostad, which is very complex and has a major impact on the company’s investments,” FI noted.
“FI’s review shows that the agreement gives rise to, among other things, large incentive differences between the owners and also large differences in influence over the governance of Heimstaden Bostad,” it said, adding that at the same time, Alecta had extremely limited opportunities to wind down the investment.
Delivering FI’s decision today, Johan Almenberg, the authority’s director general, said pensions managers needed to be aware of the risks of the investments they made.
“Seen in a larger context, Alecta’s actions raise an issue that deserves attention and a broad discussion about what the rules of the game should look like for actors who manage pension savings,” he said.
Responding to the censure, Alecta’s chief executive officer, Peder Hasslev, said: “We have taken note of the Swedish Financial Supervisory Authority’s decision and of course take the criticism very seriously.”
“Alecta shares the Swedish Financial Supervisory Authority’s conclusions that there were deficiencies in risk control and risk management in the investments in Heimstaden Bostad,” he explained.
Hasslev said Alecta believed that the shareholders’ agreement at Heimstaden Bostaden as a whole was unbalanced.
“In 2023, we initiated an extensive improvement programme with a focus on governance, risk management and competence in our asset management,” the CEO said, adding that the improvement programme had now been implemented, which had made Alecta stronger and safer for its customers.
Hasslev was hired in September 2023 to manage the troubled now SEK1.4trn occupational pensions institution after the previous CEO Magnus Billing had been fired amid blame for bad investments in US niche banks as well as in Heimstaden Bostad.
Alecta is one of several prominent Swedish pension institutions to have lost money on their investment in Heimstaden Bostad, with others – Folksam Liv, Folksam Sak, KPA Pension and the Swedish Pensions Agency – also having been under investigation by FI, although their stakes are smaller than Alecta’s.
A year ago, the Swedish Pensions Agency was reprimanded for having failed in its risk control duties regarding the property investment, while the other probes are continuing.
