Industry groups representing Swedish pension providers have called for more clarity on the proposed loosening of capital requirements for pension funds’ infrastructure equity investments which are considered environmentally sustainable.
In their responses to the Swedish FSA’s (Finansinspektionen) draft pensions regulation – which implements changes to the IORP II-based pensions legislation passed at the end of last year – Insurance Sweden and Swedish Occupational Pensions Association both said the level of evidence required under the new rules to prove that such investments were green, was too onerous.
In a summary of its objections to the rules implementing the proposed amendments, Insurance Sweden (Svensk Forsäkring) said: “The proposal for capital requirements for approved infrastructure investments is unclear and means that what may be approved investments is delimited too narrowly.”
For indirect investments, the lobby group said, it should also be sufficient for the fund manager to make the necessary checks that investments were not environmentally hazardous.
Meanwhile, Kjell Norling, chair of the Swedish Occupational Pensions Association (Tjänstepensionsförbundet), wrote: “The association notes that the proposed requirements for classifying infrastructure investments as approved in the capital requirements calculation are very extensive and complex.”
The proposal also appeared to be based on direct investment and ignored the fact that many infrastructure investments were made through funds, he wrote.
Norling went on, in the association’s consultation response, to detail the many checks a pension provider stands to have to make under the draft rules, to ensure an infrastructure investment qualifies as green.
“The association believes it must not be so complicated and expensive to carry out the classification of an approved investment that it becomes impossible, and that the occupational pension company receives a capital requirement of 45% on the investment, as it risks reducing infrastructure investments and thus counteracting the purpose of the change,” Norling said.
In the same vein as Insurance Sweden, he said it should be enough for the fund manager to make the necessary checks and assessments that the business was not environmentally harmful when the investment was made by purchasing fund units.
The draft regulation which the FSA has been consulting on is entitled “A review of the regulation for occupational pension companies 2020/21:82” (En översyn av regleringen för tjänstepensionsföretag 2020/21:82).