Sweden's KPA Pension has announced that it will allow investments in the defense industry from the beginning of 2026, following "careful consideration" of how best to take responsibility for customers' capital in a new security policy reality.

Announcing the decision, the provider explained that the geopolitical uncertainty of recent years, with wars in the immediate area, and Sweden's entry into NATO has "clearly shown" that society needs to come together.

Given this, KPA Pension confirmed that it has taken a position to allow investments in the defense industry, which had previously been ruled out.

Although KPA Pension already invests in sectors that are important for civil preparedness, it suggested that, by allowing investments in the defense industry, pension money can further contribute to a strong total defense.

KPA Pension CEO, Camilla Larsson, said: "Our most important task is to ensure that our customers receive secure and good pensions.

"That is why we invest long-term. Our assessment is that the defense industry is well-suited for this type of investment and can contribute to a diversified portfolio."

Adding to this, KPA pension business area manager for individual customers, Johan Sjöström, said: "Our customers play an important role in the country's preparedness and defense, including through healthcare, transportation, pharmaceutical supply and infrastructure.

"Therefore, it is natural that their pensions can also contribute to defense and security."

The group confirmed, however, that it will continue to exclude so-called controversial weapons, such as nuclear weapons, anti-personnel mines and biological weapons.

Any investments in the defense industry will also be subject to the same investment criteria and due diligence as all holdings in the portfolio.

The group also confirmed that, for customers who want savings without investments in the defense industry, KPA Pensions unit-linked insurance offers various options.

This also reflects a broader trend across Europe, as many pension funds have been revisiting their defence holding policies as a result of the recent geopolitical uncertainties.

And the impact of these changes is being seen already, as Danish pension provider PFA recently announced that it had increased its investments in the defence sector almost tenfold since revising its exclusion policy.

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