SWEDEN - Supervisory body Finansinspektionen (FI) said it will check whether risk management matches the investment strategy at smaller pension funds.

Following the implementation of the EU occupational pensions directive (IORP), Swedish pension funds are diversifying more into alternative asset classes, such as hedge funds or private equity, the FI noted in its latest report on the stability of the Swedish financial sector.

Although currently all pension companies obtained the green light under the traffic light system, the FI wants to make sure the right risk management is still in place should the fund decide to increase its exposure to alternatives.

"Not all of the smaller pension companies have their own risk management departments," Mona Risberg, responsible for life insurance companies at the FI, told IPE.

"They are outsourcing their asset management, but not their risk management."

She explained exposure to alternatives was still "very small" as Swedish pension funds are "very conservative".

"However, we have some indication that this will increase and we want to make sure they have the knowledge," she said.

FI intends making this assessment on risk management arrangements and  smaller pension funds next year.

"With changing investment behaviour,  we have to adapt our supervision," Risberg noted. "We want to prevent problems before they happen."

Topics