The Norwegian Financial Supervisory Authority has published an inspection report on Å Energi Pensjonskasse following an on-site review on 18 June 2024 and a supervisory meeting with the pension fund’s largest service provider on 14 October 2024. The review covered governance and control arrangements, risk exposure and capitalisation, and the authority continues to question whether the composition of the pension fund’s company portfolio is prudent. The authority highlights the pension fund’s reported exposure to “type 2 shares” of just over 25% of assets as at 30 June 2024, and notes particularly high allocations to alternative investments in the company portfolio, including 42.4% in “absolute return funds” and 56.6% in private equity as at 31 March 2024. It also challenges the assumption that higher risk in the company portfolio is justified by an investment choice arrangement, stating it cannot see that the pension fund can require the employer to cover losses arising in that portfolio. On governance and risk management, the authority expects clearer action rules for calling contributions to the premium fund, clearer triggers for extraordinary reporting and board meetings in “yellow” and “red” zones, and a more robust linkage between the own risk assessment (ORA) analyses and the board’s risk appetite and tolerance, including consideration of solvency capital coverage without the transitional rule as a measure of actual risk. It further expects the investment choice agreement to be revised so it clearly sets out rights and obligations and ensures employer investment choices remain within board-set limits, and requires the board to set a clear mandate for the investment committee. Additional expectations cover strengthening oversight of a fully outsourced operating model, addressing potential conflicts of interest, clarifying remuneration for individual control functions, ensuring control-function instructions and agreements clearly capture relevant duties, and improving documentation and controls around valuation, liquidity analysis under stressed conditions and risk assessment of alternative investments. For follow-up, the authority requested a copy of the minutes from the board meeting at which the inspection report is discussed and asked the pension fund to provide the letter to its auditor.
Norwegian Finanstilsynet 2025-03-13
Norwegian Financial Supervisory Authority issues inspection report on Å Energi Pensjonskasse and questions the prudence of its high-risk company portfolio
The Norwegian Financial Supervisory Authority's report on Å Energi Pensjonskasse raises concerns about governance, risk management, and high-risk allocations. It questions the prudence of the fund's exposure to "type 2 shares" and alternative investments, expecting improvements in governance, risk assessment, and oversight of outsourced operations. The authority also requested documentation for follow-up actions.