Aren’t pension funds supposed to spread their risks?

Individual funds are yes. But a larger fund can do so more effectively. As having a larger % of one company represents a smaller % of the funds total investment risk. IE the bigger the fund the more it can risk without endangering the whole plan.

As long as it is managed well. And that comes to your second point.

That boils down to there being no real difference. If the gov has control of multiple small funds. They can already make choices based on economy vs long term investment. And if long term comes second. Are failing the pensioners.

Having a bigger fund doesn't change this. It just allows the investment to be controlled buy one voting fund, giving it more ability to control that company. Again, something that can be used to benefit the pensioners or the economy. Depending on the priorities of the government.

But basically if the gov has access to 3 funds or one big one with the same money. They are just as able to choose how that money is used. One fund just includes options for something closer to national ownership. So more control on how the company makes the same choices.

Shitty government choice is shitty government no matter how the money is devided. Its just one way is more effective no matter what choices they make good or bad.