The crisis at Sweden’s largest pensions firm Alecta is – among other things – a test for Collectum, the body responsible for choosing providers within the country’s ITP private-sector pensions scheme, according to pensions expert Mats Langensjö.

Yesterday, the SEK1.2trn (€105bn) institutional investor ousted Magnus Billing, its chief executive officer, in a bid to restore public confidence following revelations in recent weeks of SEK19.6bn of losses on its investments in three US banks.

Only a fortnight ago, Alecta won a new five-year mandate as the default provider of traditional pension insurance in the ITP scheme.

But announcing the results of the tender, Collectum cautioned that it could not ignore “recent events” at the company, and that the ITP committee could always reconsider an award.

Langensjö, partner at management consultancy Arkwright, told IPE that the ITP “is a defined contribution plan where asset management capabilities should be at the core, so it will be interesting to see how Collectum will assess this”, as the administrator and tenderer of pension managers for ITP.

“In normal institutional asset management, these major changes should lead to immediate and deep review meetings of the investment organisation, putting new allocations on hold and probably trimming the AUM exposure, as these kind of changes in general normally lead to less focus on the investment activities which does not benefit the members and savers,” he said.

“It will be a test for Collectum and their ability and process in these circumstances,” Langensjö said, when asked to comment about the whole situation around Alecta.

Pehr Östberg, head of procurement at Collectum, told IPE that his organisation was following the matter.

“If any intervention from the Financial Supervisory Authority becomes relevant, Collectum will take a position on any possible consequences of this,” he said.

All changes to the organisation and people in company management had to be reported to Collectum, Östberg said.

“However, the CEO leaving has no direct impact on Collectum’s collaboration with Alecta,” he said.

Mats Langensjö at Collectum

Mats Langensjö

“If Alecta decides to change its investment philosophy, this will need to be reported to Collectum, as will any further changes to Alecta’s organisation,” he said.

Östberg said it was possible that the ITP committee would reconsider the recent contract awards to Alecta, “for example if an intervention from the Financial Supervisory Authority is brought up to date, then that matter will be able to be taken up in the ITP board”.

But he said the loss of public confidence in Alecta would not be a reason for revoking the award as default ITP provider.

“Although we closely follow what is happening, we do not evaluate the trust in individual insurers,” he said.

“We are interested (first and foremost) in the ability to be able to provide a good pension to private servants in the long term,” Östberg said.

A spokesman for Finansinspektionen, Sweden’s FSA, said the authority had held meetings with Alecta – both virtual and physical – and would continue to be in dialogue with the company.

“They have given an account of how the situation arose, what risks of spread there are and how great the risks of further losses are,” he said.

“We have also requested that they submit their own analysis of the situation and explain how this type of investment is carried out.

“For example, how and by whom decisions on investments are made,” the spokesman said, adding that the FSA would follow that up in further discussions.

Langensjö also said the discussion around the situation at Alecta had shed light on the significance of comprehensive and relevant investment management operations, investment process, and the fact that active asset management required sufficient resources and an investment culture.

“This is particularly important when it comes to insurers and pensions companies, where the investment management sometimes can be hidden or not visible,” he said.

The debacle would also shine a light on the internalisation trend, he said, which he said may have resulted in an unknown cost in terms of knowledge and keeping internal teams current.

“This resiliency is put to the test after many years of ‘calm waters’ for many portfolio managers,” Langensjö said.

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