The Swedish Pensions Agency (Pensionsmyndigheten) seems likely to be accused of rule-breaking regarding its poor investment in residential firm Heimstaden Bostad, since the country’s financial watchdog has now escalated its probe into the matter to a sanction case.
The case has also become particularly tricky for the Swedish Financial Services Authority (Finansinspektionen, FI) to handle, it has emerged, because of the fact its director general Daniel Barr was heading up the agency at the time the investment in Heimstaden Bostad was made.
On Monday, FI revealed that it had decided to escalate to the level of “sanction case” the probe it launched earlier this year into whether current regulations had been followed in connection with the Pensions Agency’s investments in Heimstaden Bostad.
This means it is now looking into whether it should intervene against the agency, according to the 2017 Act on the Swedish Pensions Authority’s insurance activities in the premium pension system.
The revelation came in an announcement from FI that it was appointing former judge Sten Andersson as a special examiner in the sanction case, because Barr “has declared himself unfit and is therefore not participating in the handling of the case”.
FI said: “The special examiner’s work shall consist of examining a possible draft decision before it is presented to the board, with the aim of ensuring quality and impartiality in the handling of the case, in order to safeguard confidence in the authority in a case where the head of the authority is unfit.”
Barr was director general of the Swedish Pensions Agency for five years before becoming director general of FI in March 2023.
The agency announced back in March 2021 that it had made the investment in Heimstaden Bostad, declaring at the time that it had ploughed SEK1bn into the company’s equity. This was the first real estate investment the Pensions Agency made for the traditional insurance portfolio it runs as a payment option in Sweden’s first pillar premium pension system.
In the agency’s 2023 annual report, its investments in Heimstaden Bostad ordinary shares are shown to have a book value, corresponding to their real value, of SEK149m, down from a purchase price of SEK726m.
According to the report, the authority also holds SEK2.14bn of preference shares in Heimstaden Bostad – a safer type of security which is shown to have increased somewhat in value since purchase.
FI is also undertaking investigations relating to investments in Heimstaden Bostad – which ran into problems as the cost of debt soared while property values slumped – regarding Sweden’s largest pension fund Alecta, as well as pensions and insurance group Folksam and its municipal pensions subsidiary KPA Pension.
A spokesman for FI told IPE yesterday that there were no new developments in those probes, however.
FI said in July that its investigations into Alecta – which also concern failed investments the occupational pensions provider made in US niche banks – had been escalated to a sanction review, and said its preliminary assessment was that Alecta had violated several regulations.
Alecta was due to send its response to FI by 6 September.
Asked to comment on a media report that the pension fund had rejected most of the watchdog’s findings, a spokesman for Alecta told IPE today: “Given that it is an ongoing process, we await the completion of the review before commenting on our own evaluation”.
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