​Swedish Pensions Agency pushes back after watchdog’s Heimstaden Bostad censure

Sweden’s financial watchdog has reprimanded the Swedish Pensions Agency (Pensionsmyndigheten) over its loss-making investment in the troubled residential property company Heimstaden Bostad, saying it failed in its risk control duties.

The announcement today has drawn reactions both from the Pensions Agency, and the Financial Supervisory Authority’s (Finansinpektionen, FI) own director general – who headed up the agency at the time the failures are judged to have happened.

FI said today it had investigated whether the Pensions Agency had followed the rules in connection with its investments in Heimstaden Bostad – a probe which concerned the period 2021 to 2023.

Erik Blommé, chief legal officer at FI, said: “The Pensions Agency took measures to gain knowledge about the risk of investments in Heimstaden Bostad, but the measures were not sufficient.

“The Pensions Agency has also not ensured that it had sufficient opportunities to manage this risk. This means that the authority has not met the legal requirements for risk control,” he said.

FI said the type of risk focused on in its probe had been that of losing the invested funds.

It found the agency had taken steps to gain knowledge about the circumstances that affected that risk, including differences in incentives and influence between the owners, agreed price for shares and the obligation to reinvest funds in the company.

But the agency’s measures have not been enough, and it had also not ensured it could manage the risk that the investments entailed, FI said.

“The Swedish Pensions Agency has therefore received a reprimand,” it added.

“The Pensions Agency took measures to gain knowledge about the risk of investments in Heimstaden Bostad, but the measures were not sufficient”

Erik Blommé, chief legal officer at FI

Anna Pettersson Westerberg, the agency’s director general, commented: “We have received the Swedish Financial Supervisory Authority’s decision and note that in our responses we have had a different description of the Swedish Pensions Agency’s risk management in connection with the investment in Heimstaden Bostad.”

“We will now read the decision, analyse it in more detail and consider possible measures,” she continued.

Meanwhile, Daniel Barr, FI’s director general, said in a comment on the watchdog’s website: “As the top manager of FI and a civil servant, it has been absolutely crucial for me that the investigation was able to proceed with a high level of integrity and without my involvement.”

This was why he had reported a conflict of interest, he noted, because he had been director general of the Swedish Pensions Agency during the period covered by FI’s investigation.

Acknowledging the FI’s reprimand to the Pensions Agency, Barr said it remained the case that he was prevented from commenting on the matter.

However, he added: “I can state that the contract with Heimstaden was carefully reviewed by both internal and external lawyers before the Swedish Pensions Agency made a decision on the investment.”

“The conclusions from that review differ from the conclusions stated in FI’s decision,” he continued, adding that he had great respect for the FI’s decision.

“I will now read the decision carefully to understand why this conclusion has been reached,” he said.

According to FI, the agency lost around SEK400m (€36.4m) on the total SEK2.7trn it had invested in Heimstaden Bostad since March 2021, when it had to write down about 15% of its value in its 2023 accounts.

FI has also been probing whether other pension and insurance firms — Alecta, Folksam Liv, Folksam Sak and KPA Pension – followed the rules in connection with their investments in Heimstaden Bostad, and said today that those investigations were still going on.

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