Alecta in Sweden said it aims to become an industry leader in risk management, having devised a major improvement programme to correct past failures that led to huge losses on individual investments in 2023 and a crisis of confidence in the institution.
Reporting its 2024 results this morning, the occupational pensions giant said its defined contribution (DC) product Alecta Optimal Pension returned 6.8% in 2024, compared with 8.7% the year before, while the collective consolidation of its defined benefit (DB) scheme – which makes up the bulk of the institution’s assets under management (AUM) – increased to 162% from 158%.
Peder Hasslev, Alecta’s chief executive officer, said: “After the events of 2023, we conducted a thorough review of all parts of the business, focusing on asset management.”
“We have had shortcomings in risk management in equities management and in the investment in Heimstaden Bostad,” he said, referring to the pension fund’s stake in the residential property company, which has suffered a big fall in value.
“Based on this, we developed an extensive improvement programme with the ambition to become an industry leader in risk management,” Hasslev added.
In the course of 2024, the pension fund carried out and implemented most of the measures in the programme, which he said made Alecta a safer and stronger company.
The pension fund also announced a new governance model.
“To ensure greater rigour, structure and transparency in ownership governance, the social partners decided at the 2024 board meeting on a new ownership governance model for Alecta,” it said.
This meant, inter alia, that the supervisory board (överstyrelse) – a panel of employer and worker representatives which sits at the top of Alecta’s governance structure – has changed its name to authorised representatives (fullmäktige), and that a preparatory committee (beredningsråd) would be established, while the supervisory board’s preparatory committee is being replaced with a nomination committee (valberedning).
Alecta’s total AUM stood at SEK1.31trn (€118bn) at the end of the year, little changed from the level reported for the end of June.
The figure reveals that Swedish national pension fund AP7, which reported its results a month ago, overtook Alecta in 2024 to become the Nordic country’s biggest pension fund, with SEK1.44bn AUM.
Among asset classes, Alecta said equities, which constituted SEK463bn of the overall portfolio, returned 9.6%, while fixed interest assets, amounting to SEK596bn, produced 1.3%, and alternative investments – real estate, infrastructure, alternative credit and unlisted shares — generated a 5.1% return.
The alternatives portfolio amounted to SEK255bn at the end of 2024.
The pension fund said the value of its investment in Heimstaden Bostad – a problematic holding at the heart of Alecta’s crisis — had improved somewhat, rising 8% during 2024 to a value of SEK40.7bn.
However, the value is still far short of the SEK49bn it was stated at in September 2023.
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