The Organization for Economic Cooperation and Development has “no strong view” as to whether the Swedish AP funds should merge, according to a report by the international organization requested by the Swedish government.
The division of the four main AP funds “is unique among global pension reserve funds,” and that “reserve funds around the world do not seem to encounter major difficulties operating on a centralized basis,” according to the report. However, operating costs of the Swedish funds were in line with global counterparts, the report said.
The question of whether AP1, AP3 and AP4, all of Stockholm, and AP2, Gothenburg, should be merged has persisted since the four funds were established in 2001.
The OECD report recommends the Swedish government develop a “more powerful, consistent and specific investment mandate across the AP funds (which would) make the evaluation of their performance more transparent and easier to establish.” The report adds that “changes to the funds' structure based on future reviews may be more readily motivated based on such an objective measurement.”
The review does recommend that the role of AP6, Gothenburg, which invests in Swedish private equity, be clarified, and that it might be merged into the four main funds. The review also suggests consideration for opening AP6's investment horizons to extend internationally.
The five funds have combined assets of 873 billion Swedish kronor ($130 billion).