An open dispute has broken the hitherto relative calm around the upcoming consolidation of Sweden’s national pensions buffer funds, the AP funds, with the smallest fund objecting to the planned disposal of most of its assets — and some staff.
The row is between Gothenburg-based buffer funds, the SEK458bn (€41.6bn) AP2 and the SEK71bn private-equity specialist fund AP6, which are to be merged at the end of this year as part of the larger AP funds reform.
At the beginning of this summer, it emerged, AP6’s board wrote to the board of AP2 warning against the larger fund’s plan to place more than 70% of AP6’s assets in a wind-down portfolio without staffing, saying this was not in line with the action that was decided upon by parliament.
The government-appointed special investigator tasked with helping AP2 and AP6 implement their merger presented her interim report on Tuesday.
Eva-Lena Norgren, the investigator, summarised the merger as “the transfer of the Sixth AP Fund’s operations and assets to the Second AP Fund”, saying the purpose of the transfer was mainly to achieve more efficient management of the buffer capital.
A spokesman for AP6 told IPE that AP2 did want AP6’s highly profitable co-investment business.
He said the AP6 board had warned AP2’s board that there were major financial and operational risks with AP2’s plan, including a risk that future returns would be lost to the disadvantage of the Swedish pension system.
“The government coordinator has consistently chosen to support AP2’s views and has so far had no objections to the path chosen by AP2,” he said.
Asked to comment on the dispute, Åsa Norman, head of communications and sustainability at AP2, told IPE: “We are responsible for implementing what has already been decided by the Swedish Parliament, in a professional and responsible manner.”
She said the collaboration between the organisations was progressing, with several working groups, but that, of course, there were challenges. “One purpose of the parliamentary decision is to reduce costs, which means jobs will be lost,” she said, adding that this was obviously not an easy situation.
“Another challenge has been that the management of AP6 has held a differing view regarding the goals set by the government and parliament,” Norman said.
Social Democrat member of parliament Joakim Sandell this week urged minister for financial markets Niklas Wykman to ensure AP6’s expertise and experience were not lost in the merger.
“How does the minister intend to ensure that the competence and experience available within AP6 is utilised in the continued development of the organisation and governance of the AP Funds?” he said in an official parliamentary written question.
Read the digital edition of IPE’s latest magazine
