The Swedish government said it will work on the legislative framework around how the national pensions buffer funds invest in illiquid assets, taking in recommendations from an external consultant in the wake of big losses on failed Swedish battery firm Northvolt.
Publishing its annual report on the AP funds on Friday, the Swedish Finance Ministry said: “In light of the discussions that arose after Northvolt’s bankruptcy, the Government decided on an external review of the First–Fourth AP Funds’ investments in illiquid assets.”
That review – conducted by consultancy Arkwright – focused on organisation, expertise and investment forms, the ministry said, adding that a number of recommendations were made in a final report in March 2026.
“Based on these, the Government Offices will now work internally further with the provisions of the AP Fund Act, and analyse the need for more measures regarding the forms of investment in illiquid assets,” it said.
In its report, which was included in Friday’s larger annual report on the AP Funds, Arkwright said the AP Funds needed to boost staffing for their alternative investment operations, saying that their expansion into illiquid assets had been slow even though the funds were permitted in their mandate to allocate up to 40% of their total assets to the investment type.
The four funds AP1-4 were given increased scope to invest in illiquid assets from 2019 onwards, but Arkwright said that between 2018 and 2025, the proportion of illiquid assets – such as direct investments in unlisted companies, infrastructure and property – had only grown by three percentage points, of which about 90% was due to appreciation and only 10% to net investments.
Asked for comment, Tobias Fransson, head of sustainability, finance and communications at AP4 in Stockholm, told IPE that the buffer fund welcomed the special review of investment structures for illiquid investments that the government had initiated a year ago, and which was presented in March this year.
“Several of the overarching recommendations are natural and ones that AP4 agrees with and is already addressing today, such as adequate staffing resources and clear governance and follow-up,” he noted.
“We continuously review how we can develop our management and our processes, and we of course take into account the findings of the review that has now been completed,” Fransson added.
At AP3, Dan Bergman, head of alternative investments, said the buffer fund shared the view that alternative investments are resource‑intensive.
“Over the past five years, AP3 has significantly strengthened its organisation, doubling the number staff dedicated to alternative investments,” he told IPE, adding that the fund had also reinforced its legal function with specialist expertise in alternative investments.
“In this context, the consolidation of the AP funds offers an important opportunity to further build and maintain robust specialist teams within niche asset classes,” Bergman said.
The four funds – of which only three remain following a reform – have faced considerable scrutiny over their 2021 decision to form a joint company to invest in the startup Northvolt, which at the time was seen as a major green battery hope to help meet Europe’s energy transition needs locally.
Northvolt’s subsequent bankruptcy left the funds with a SEK5.8bn (€532m) loss.
