SWEDEN - The SEK3.5bn pension scheme of Swedish Hydro-electrical company Vattenfall is looking to double its allocation to equities and has appointed a broker and pension product providers for its DC offering.
Bengt Edstrom, pensions manager at Stockholm-based Vattenfall said the corporate fund will shift bonds into equities “when we think the markets are good”. The scheme intends to increase its equity weighting from a current 20% level to 40 or 45%. At the moment 55% of the fund is held in fixed interest. Cash and deposits account for 25%. Most of the fund’s equities are currently managed internally.
State Street global Advisors oversees its international investments and Handelsbanken manages domestic holdings.
Edstrom said he is looking at a five year investment horizon and although it “is not outside the realms of possibility” that markets could pick up in the second half of the year, he anticipates more favourable equity conditions in 2003 or even 2004. He added: “There is no rush. We will stay in bonds at least another two or three months.”
For the defined contribution arrangement, Max Matthiessen was signed as broker in January. For the pension product providers, the fund expects to sign contracts with four insurers - Skandia, SPP, AMP Pension and SEB Trygg. Premium waiver and family protection will be fronted by SPP and most of the risk will be reinsured in Vattenfall’s own “captive” insurance company.
Between 20-25% of Vattenfall’s employees are covered by the new DC arrangement. Bengt estimated that 600-1000 employees could take up the offer, generating SEK50m within one year.
By Luke Clancy
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