Responsible long-term management of the Government Pension Fund

The white paper addresses the investment management framework, investment strategy, responsible investment activities, as well as the performance of the GPFG and the Government Pension Fund Norway (GPFN). Besides, the white paper discusses the continued development of the investment strategy and responsible investment.

“The Government Pension Fund is an intergenerational fund that shall benefit both current and future generations. The Government is committed to sound and responsible long-term investment of our common savings. The white paper we are publishing today contributes to transparency in the management of the Fund and broad endorsement of key choices“, says Minister of Finance Trygve Slagsvold Vedum (Centre Party).

Strong performance in 2021

“Strong performance in the stock market contributed to solid results for the Funds last year. Financial markets are however volatile, and we need to be prepared for potential Fund value reductions. As an ever-increasing share of the Norwegian welfare state is funded by transfers from the GPFG, we are becoming more vulnerable to Fund value fluctuations“, says the Minister of Finance.

Strengthening the climate risk efforts

See separate press release on the Government’s proposals on climate risk.

Review of Norges Bank’s management of the GPFG

The Ministry of Finance reviews Norges Bank’s management of the GPFG on a regular basis. The purposes of such reviews include assessing the performance of Norges Bank and examining whether the scope for deviations from the benchmark index; so-called active management, should be modified.

A new review is presented in this white paper. The Ministry of Finance has received analyses and assessments from both an expert group and Norges Bank. The analysis of the expert group shows that nearly all volatility in the return on the Fund can be explained by benchmark index developments. The management of the Fund may therefore be characterised as close to the benchmark.

Over the period from 1998 to 2021, Norges Bank’s active management has generated excess return of NOK 170 billion, net of costs. The Ministry of Finance’s overall assessment is that investment management has been satisfactory and that the GPFG should continue to be managed with a certain element of active management. The Ministry agrees with Norges Bank’s assessment that the scope for deviations from the benchmark index is sufficient, and is proposing to keep this unchanged.

“Transparency and insight into investment management and the risk assumed by Norges Bank in its active management is important. Performance must, however, be assessed over a longer time horizon than from only one year to the next. The reviews strengthen our ability to adhere to strategies that are profitable in the long run“, says Minister of Finance Trygve Slagsvold Vedum.

Large ownership stakes on the Oslo Stock Exchange

Folketrygdfondet’s ownership stakes in companies listed on the Oslo Stock Exchange have increased over time, and have now reached levels where there is a risk of breaching the investment mandate’s ownership stake limit of 15 percent in any individual company. The Ministry of Finance has not reached a final conclusion on this issue, and will initiate a new comprehensive assessment of various alternatives.

New unit in Tromsø

The Government aims to establish a separate unit in Tromsø. Whether this is to be in the form of a new unit of Folketrygdfondet, a unit subordinated to Folketrygdfondet, a new independent unit or part of another central government investment management body, has not been decided and will be examined in more detail. It will also be examined whether such unit may invest in unlisted companies in and outside Norway.

“I believe that this proposal will serve to strengthen central government presence and develop new professional investment management centres in Northern Norway“, says the Minister of Finance.

Read more:

• Strengthening climate risk efforts in the Government Pension Fund Global
• The Government Pension Fund 2022 white paper