SWEDEN - The Swedish city of Gothenburg has hired Stockholm-based manager KPA Pension to administer its municipal pension scheme.

The SEK5m (€0.5m) contract - which covers pension payments and the management of a pension hub for defined contribution contracts - will initially cover a four-year period.

KPA Pension, which has SEK80bn in pension fund assets under management (AUM), currently manages public-sector pension schemes for around 500 municipalities and county councils.

Chief executive Lars-Åke Vikberg attributed the success of KPA Pension's bid to the fact it was the largest pensions administrator operating in the Swedish municipalities market.

"Our expertise was crucial [to our being awarded the contract] - and our ability to handle large clients such as Gothenburg," he said.

The company, which is wholly owned by mutual insurer Folksam, claims to be the only pensions company in the Swedish market to offer exclusively ethical investments.

It is a signatory to the Global Compact and follows the guidelines drawn up by the Swedish Standards Institute on social responsibility.

However, Vikberg said in this case the ethical element was of minor importance because the contract did not include funding.

KPA posted an 8.2% increase in returns last year. It also recorded a solvency ratio of 186%.