With the best intentions, the four Swedish buffer funds have so far been unsuccessful in meeting their target of changing the ethics of at least three to five companies. Caroline Liinanki finds out why

PPM, the Swedish premium pension authority, is having another go at reducing the number of funds listed on its platform. The firm now wants to introduce a limit of 25 funds for all managers. Currently, a parent company that owns more than one fund company can have up to 50 funds registered on the system.

The Swedish government is to consider a similar structure for the AP funds’ ethical investments as that adopted by the Norwegian Government Pension Fund. The ministry of finance has set up a committee to look into the AP funds’ ethical investments and their policies for corporate governance. The structure of the Norwegian fund is strongly touted as a possible blueprint.

The AP funds are pushing the government for a reform of its investment regulations. The rules, which have been in place since 2000, are generally regarded as old-fashioned and narrow. The AP funds have so far been trying to opt for a change through talks with the government and parliament.

Alf Guldberg, head of Sweden’s pension fund support group, SIRP, criticises the government’s rigid traffic light system and shares his concerns about his members’ increased appetite for risk. Caroline Liinanki reports.

NRPN: What problems are Swedish investors facing at a European level?

AG: Solvency II, the EU project to create a risk-related solvency model, will definitely be the dominating issue in the industry for some time. The big question is whether pension funds will have the same regulation as the commercial life and insurance companies. However, we still do not know much about the time frame.

A former director at AP 1 and professor of economics at Stockholm University wants the five Swedish buffer funds – together worth €90.6bn – to be merged into one to reduce costs by SKr2bn (€200m) a year.

AP 6, the €1.85bn Swedish national buffer fund, which is currently only allowed to invest domestically, is preparing to expand its investments into the Nordic market.

The Swedish national pension buffer funds (AP 1, AP 2, AP 3 and AP 4), which have formed an ethics council to assess the ethics of the non-Swedish companies they invest in, expect to increase the standards of up to 50 per cent of the companies they engage with over the next 12 months. GES Investment Services has been appointed to carry out the screening work.

The long-awaited scheme for white-collar workers, ITP, is finally on the verge of launching. However, though the tenders have been awarded, many local players already have concerns about how the system will perform. Caroline Liinanki reports.

nrpn spoke to four Swedish consultants about the issues facing their clients, and the question of whether there are too many players in the market.

AP 7, the SKr65bn (€7bn) state pension fund, has joined Mississippi Public Employees’ Retirement System (MPERS) in suing Dell over alleged accounting fraud. AP 7 is believed to face a potential loss of approximately $5m (€3.7m).

A coalition of institutional investors led by the Swedish national buffer fund AP 1, have succeeded in bringing the Marriott hotel chain to the negotiating table to address concerns about its human rights record.

Premiepensionsmyndigheten (PPM), the SKr22.1bn (€2.4bn) Swedish Premium Pension System, has hired WassumRating and Standard and Poor’s to rank the approximately 700 funds housed within its national pension savings platform. The contracts will run until the end of 2009, but the agreements may be extended by a further 12 months.

The Swedish government has published its annual evaluation of the country’s €80.1bn AP funds, in which AP4’s decision making and use of internal management process has been singled out for criticism.

• AP1 – Owing to a good result in 2005, the long-term prerequisites for the fund to reach the targets of its board have improved. Above all this applies to the coming year. The existing long-term results have been judged to be only slightly positive after costs.

PP Pension, the Swedish journalists’ fund, is to add hedge funds and private equity to its portfolio. Tomas Lindstrand, CEO of the SKr7.6bn (€805m) fund, told nrpn that hedge funds and private equity would be added to the fund’s portfolio later in the year at the expense of its property investments.

TeliaSonera’s SKr16.2bn (€1.71bn) corporate pension fund is planning to add a new manager to its Japanese equity portfolio. Peter Antonsson, CEO of the fund, told nrpn that TeliaSonera is considering expanding its Japanese holdings because of the fund’s positive returns from its Asian investments.

Kyrkans pensionskassa, the SKr7bn (€742m) scheme covering the employees of the Swedish church, has announced it is expanding its equity portfolio at the expense of its bond exposure.

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andra år.

Sweden’s €19bn pension savings platform, the Premium Pensions System (PPM), which has been suggested as a basis for the UK’s National Pensions Saving Scheme, is likely to be reformed following the publication of a report by Karl-Olof Hammarkvist, professor at the Stockholm School of Economics.