Sweden's Peab fund to invest up to 40% in own shares

SWEDEN - Peab, a Swedish construction and civil engineering company, has together with Folksam, the pension and insurance provider, launched a special fund for Peab employees that will be able to invest as much as 40% in the company's shares.

Critics have warned that investing pension assets in the employing company could mean workers take on "Enron-style" risk.

However, some industry experts have said the risk element is low because the Peab fund constitutes only a small proportion of the employees' total pensions, as they will draw a state pension and their occupational pensions, provided under collective bargaining agreements.

Additionally, the 40% investment threshold is the upper limit.

The Peab Fund, a mutual fund that will invest in shares and share-related transferable securities, as well as fund units, will be actively managed by Swedish asset management company Cicero Fonder.

Peab employees will be offered various opportunities to save for their retirement in the new fund.

These retirement savings will be connected to insurance programmes providing Peab employees with survivor benefits as part of their long-term retirement savings plans.

Mats Johansson, vice-president of Peab, said: "Establishing the Peab fund is the first and fundamental step in a deepening cooperation between Peab and Folksam in the area of pension plans.

"Through this fund, Peab will give its hard-working employees new opportunities, in addition to those provided under the collective bargaining agreements, to safeguard their future after a life of service."
 
Mikael Fekete-Robertsson, head of the life insurance and savings market at Folksam, added: "This is the first step in providing Peab employees with attractive savings choices.

"Through this cooperation, Folksam will also be able to offer various insurance and savings programmes to Peab employees over time."

The Peab Fund will be available through Cicero for the general public.

However, it will not be an option in any of the supplementary occupational pension systems administered by Collectum or Fora.