Alecta’s board of directors has decided to increase defined benefit (DB) pensions by 1.6 per cent for 2025, aligning with inflation over the past year, resulting in a SEK 10bn distribution to customers.

The increase will impact around 1.5 million customers with DB occupational pensions under the ITP 2 plan, affecting both occupational pensions in payment and earned pensions not yet paid.

In particular, 563,000 ITP pensioners will see an increase in payments, while 949,000 savers will benefit from increased earned pensions that have not yet been paid.

Alecta has increased pension payments in line with inflation yearly since the ITP plan was established in 1960.

Commenting on the increase, Alecta pension economist, Staffan Ström, said: "During a period of very high inflation, customers with DB pensions with Alecta have been fully compensated.

“In the past year, we have had a significantly lower inflation rate, and this is reflected in the increase of 1.6 per cent for 2025.

“Looking at the last three years, SEK 94bn has been distributed to approximately 1.5 million customers. Pension payments have increased by almost 20 per cent. This is an important addition to many pensioners’ wallets."

In addition to this, Alecta’s board of directors decided to reduce premiums for DB retirement and family pensions by 25 per cent for 2025, in accordance with its funding policy.

Alecta's funding level amounted to 163 per cent on 30 September 2024 and therefore exceeded 150 per cent, which according to Alecta's funding policy was the lower limit for premium reductions.

The premium reduction is calculated in relation to the current premium level, meaning the premium reduction would be lower for insurance policies taken out at older, lower premium levels than those that apply today.

Alecta product manager, Fredrik Palm, said: “Thanks to a starting position with a strong funding level, Alecta has been able to fully hedge the value of pensions through the period of very high inflation we have experienced in recent years.

“At the same time, Alecta has been able to provide annual premium reductions that have reduced pension costs for Swedish companies.

“The refund decisions have naturally had a negative impact on the funding level, but at the same time the returns we have generated have made a major positive contribution. This means that we can continue to provide premium reductions to companies in 2025.”

Alecta also said that the premium reductions on risk and savings premiums amounted to SEK 8bn, with Palm suggesting that the premium reductions help Swedish companies reduce their pension costs.

“Alecta's corporate customers should never pay more than is necessary to fulfil their pension obligations to their employees. The fact that we can continue with reduced premiums is a clear example of the stability and long-term strength of our mutual model,” he added.

The decision to value-hedge earned pension rights meant that companies' premiums would be reduced by a further SEK 0.7bn. Overall, these decisions resulted in reduced costs of SEK 8.7bn in 2025 for Alecta’s 35,000 corporate customers.

The board also committed to continue to provide premium reductions for risk insurance in 2025, due to its “strong” financial position. It decided on a 90 per cent premium reduction for health insurance and a 60 per cent premium waiver for sickness and parental leave.

The premium for occupational group life insurance TGL will also be reduced from SEK 31 to SEK 26 per month per employee.

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