Freshly sanctioned by Sweden’s financial watchdog for failing to control investment risks, the Nordic country’s largest pension fund now faces a wait for a powerful occupational pensions panel to decide whether the bulk of its business will be snatched away.
On Wednesday, Alecta – Europe’s fifth-biggest pension fund with SEK1.4trn (€120bn) under management – was slapped with a SEK50m fine for failings over its high-profile loss-making investment in residential property firm Heimstaden Bostad.
Concluding its investigation, launched in 2023, into whether Alecta had complied with the rules in connection with investments in Heimstaden Bostad, the Swedish Financial Supervisory Authority (Finansinspektionen, FI) said 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.
Most of Alecta’s business, the provision of collectively-agreed occupational pensions, is via the ITP scheme for privately-employed salaried employees and it is the default provider for traditional insurance within the scheme.
However, the ITP Committee – which governs the ITP plan – is now considering FI’s decision and could remove Alecta altogether as an ITP provider.
Bodil Nelsson, head of marketing and communication at Collectum, the administrative body for the ITP scheme that also serves as the secretariat for the ITP Committee, told IPE: “The ITP Committee will now analyse the decision from the Swedish Financial Supervisory Authority. Once that analysis is complete, they will revert.”
Asked what the options are that are open to the ITP Committee, she said: “They are assessing whether Alecta meets the conditions set out in the agreements between us.
“In a worst-case scenario, this could mean that they would no longer be an eligible option,” she added.
IPE has asked Alecta for comment on the fact that the committee is now assessing options following the FI’s decision.
Back in 2023, when the bad-investments crisis at Alecta was erupting, Pehr Östberg, Collectum’s head of procurement and chair of the ITP Committee, said it was possible that the ITP committee would reconsider the award of ITP contracts to Alecta, which had then just been awarded, if, for example, FI intervened.
The judgement from the Swedish FSA puts the ITP Committee and Collectum in a difficult position, not only because Alecta is the main ITP provider but also because the relationship between Collectum, the social partners and Alecta is a historically close one.
Östberg himself worked for Alecta for 15 years until 2017.
Swedish financial news service Affärsvärlden reported in January that, as recently as a few months before, it had been decided that Collectum could withdraw SEK300m from Alecta’s balance sheet to strengthen its own finances.
