Swedish pension provider Alecta has reported a 6.8 per cent return on its investments in 2024, emphasising that work is underway to build a “stronger and safer Alecta” following recent issues faced by the group.

The provider’s latest results showed that Alecta's financial position developed well during the year, as both the solvency and the collective consolidation level within the defined benefit (DB) insurance are at a high level, at 202 per cent and 162 per cent, respectively.

This was primarily due to positive returns, as Alecta's defined premium savings product, Alecta Optimal Pension, yielded a return of 6.8 per cent in 2024, down from 8.7 per cent in 2023, and 6.8 per cent at an annual rate over the past five-year period.

In particular, the group's equity portfolio amounted to SEK 463bn and returned 9.6 per cent, while interest-bearing assets amounted to SEK 596bn and yielded a return of 1.3 per cent.

In addition to this, alternative investments, which totalled SEK 255bn, delivered a return of 5.1 per cent.

The value of Alecta's holding in Heimstaden Bostad also increased by 8 per cent during the year, and was worth SEK 40.7bn at year-end.

Given this performance, Alecta said that there has been "renewed confidence" in Alecta Optimal Pension as the the default option for defined contribution retirement pension within insurance employees' occupational pension agreements, FTP, with total investments amounting to SEK 301bn at the end of the period.

The group also reassured the industry and savers that work has continued to improve its ownership governance model, after the provider was recently the focus of two investigations by Sweden’s Financial Supervisory Authority (FI).

The FI previously launched an investigation into Alecta's risk management, after the group revealed losses of SEK 20bn following turbulence in the US banking market in 2023.

The supervisory authority later extended its investigation into Alecta in order to see if it followed the correct regulations in relation to its investments in Heimstaden Bostad.

This investigation found that the pension provider had “violated several regulations” in relation to its investments.

However, the group said that, since autumn 2023, it has worked "hard" to ensure better risk management, governance and competence, particularly in asset management.

As part of this, it developed an improvement program with 17 action points in 2024, which focused specifically on these three areas.

In addition to this, in an effort to ensure greater rigor, structure and transparency in ownership governance, the social partners decided on a new ownership governance model for Alecta at the 2024 board meeting.

This means, amongst other things, that the previous board has been renamed the general council, that a preparation council has been established and that a nomination committee has replaced the board's preparation committee.

"During the year, we have focused on building a stronger and safer Alecta. The business has continued to deliver good pensions, low fees and good service to our customers," Alecta CEO, Peder Hasslev, explained.

"After the events of 2023, we conducted a thorough review of all parts of the business, focusing on asset management. We have had shortcomings in risk management in share management and in the investment in Heimstaden Bostad.

"Based on this, we developed a comprehensive improvement program with the ambition to become an industry leader in risk management. During 2024, we have carried out and implemented the vast majority of the measures in the program, which makes Alecta a safer and stronger company."

The group also confirmed that its board has decided on a premium reduction for DB old-age and family pensions for 2025, cutting this by 25 per cent.

It also increased DB pensions by 1.6 per cent for 2025, corresponding to inflation over the past year.

In total, Alecta distributed SEK 94bn to 1.5 million private customers with DB pensions over the past three years, an increase of almost 20 per cent.

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