Calls for Norway to Go More Passive
The Norwegian Government Pension Fund suffered its worst year in 2008, losing NKr633bn or close to a quarter of its value. Critics likened it to gambling.
About NKr80bn of the losses were directly related to active management, which has prompted calls for a more passive investment strategy. In April, Norway’s finance ministry started a broad review on whether to continue active management of the NKr2500bn fund, the world’s second largest sovereign wealth fund.
A new academic report, commissioned by the government in connection with the review, says the fund has been taking “appropriate” risks. But it recommended one notable change: incorporating systematic risk factors, such as volatility and liquidity, into the fund’s benchmark.
Pension Fund Deficits
As the global financial crisis spreads like wildfire through the wider economy, an increasing number of companies struggling to survive a fast-deepening recession, there is a risk that some good companies will go under. Penshion schemes are influenced greatly.
According to figures by the Pension Protection Fund (PPF), more than 6900 final-salary pension schemes in the UK are in deficit these days. The nation is facing a shortfall of 228 billion pound, which indicates a situation even worse than the 204 billion pound deficit at the end of January this year.
The PPF, a lifeboat for schemes whose employers fail, blamed the drop on falling share price.
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