What is Norway’s Government Pension Fund (GPFN)?
The Government Pension Fund of Norway has two Norwegian investment funds with different missions. First is the Oil Fund, or Government Pension Fund Global (GPFG). Founded in 1990 to invest surplus Norwegian petroleum income, the GPFG is the world’s largest sovereign wealth fund. The portfolio includes real estate and fixed-income investments.
The second fund is the Government Pension Fund of Norway (GPFN). Founded in 1967 as a national insurance fund, it is smaller than the Oil Fund. Management is distinct and confined to local and Scandinavian investments. It is a substantial stakeholder in several significant Norwegian firms listed on the Oslo Stock Exchange.
Learning about the Norwegian Government Pension Fund
The Ministry of Finance manages Norway’s Government Pension Fund under the Act of Parliament and guidelines with extra requirements.
Norges Bank Investment Management (NBIM), part of the Norwegian Central Bank, handles the worldwide fund for the Ministry of Finance. Since 2004, an ethical committee has governed fund investments. The council can bar problematic corporations from the fund. Folketrygdfondet oversees the domestic fund.
The Government Pension Fund aims to help governments save for growing public pension expenditures. It also aims to help long-term government spending decisions on Norway’s significant petroleum income.
The Ministry of Finance’s Government Pension Fund investment strategy is to maximize returns with low risk. The strategy considers long-term return and risk, the fund’s goal, the asset manager’s advantages, and financial market assumptions. The ministry values financial theory, research, and experience.
The Government Pension Fund Global may soon sell its oil and gas interests. At the end of 2017, the fund suggested removing about NOK 300 billion (US $35 billion) in oil and gas holdings from its stock benchmark index to reduce Norway’s vulnerability to price drops.
As the fund reached $1 trillion in 2017, divesting from oil and gas assets might impact global investments due to the energy sector’s economic significance. Environmental, social, and governance criteria are essential to investor due diligence. The Norwegian government approved the plan in the fall of 2018.
Conclusion
- The Government Pension Fund of Norway comprises two Norwegian investment funds: the Oil Fund (GPFG) and the GPFN.
- The Ministry of Finance manages the Norwegian Government Pension Fund.
- The Government Pension Fund aims to assist government savings for growing public pension expenditures.
