FINLAND - The e6.9bn Valtion Elakerahasto, Finland's State Pension Fund, is set to foray into indirect real estate investment in 2005.
The defined benefit scheme, which is the buffer fund for state employees, recently invested in a European-based property fund and is looking to make further indirect real estate investments this year.
Managing director Timo Loyttyniemi (pictured) said: “We are looking for avenues for real estate indirect investment products in Europe and we have taken the first steps towards that direction.
“We have made a decision to enter one fund of fund product, which is an indirect real estate fund and we are looking during this year to make a few more of those.”
Loyttyniemi said the fund made the decision to invest in the property fund of fund in spring last year but had to wait until the product was ready.
“The idea is for us to be involved in private real estate in order to hedge if there’s a possibility for inflation in some years,” Loyttyniemi said.
“Then there’s the diversification effect of entering a different asset class. The instrument is interesting because we feel that as we are a small organisation, this fund of fund vehicle gives us an avenue to this world.”
The fund might consider direct funds at a later stage, Loyttyniemi added.
The fund’s current asset allocation stands at 60% fixed income and 40% equities, overweight in Nordic countries and Europe.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.