Swedish pension company for local government workers, KPA Pension, returned -11.6 per cent on occupational pension insurance in the first three quarters of 2022.

By comparison, KPA Tjänstepensionsförsäkring AB returned 8.2 per cent in the same period in 2021.

KPA Tjänstepensionsförsäkring AB’s premium income increased from SEK 15.2bn to SEK 15.8bn in Q1 to Q3 2022, while its solvency ratio rose from 195 per cent to 229 per cent.

The change in solvency ratio was partly attributed to a changed assumption regarding the movement of pension capital, which affects the value of actuarial provisions.

Alongside a total return of -11.6 per cent, the rate of return on defined benefit pensions was -11.3 per cent, down from 4.4 per cent a year prior.

During the period 2012-2021, the average total return amounted to 7.3 per cent.

KPA’s managed capital fell from SEK 251.5bn to SEK 243bn over the first three quarters of 2022.

In Q1 to Q3, KPA invested SEK 5bn in mortgage funds and donated SEK 1bn to support agriculture in poorer countries.

“It has been another quarter with concerns on the financial markets, rising inflation and large interest rate increases,” commented KPA Pension CEO, Camilla Larsson.

“This makes our work, to provide employees in municipalities and regions with a secure pension that contributes to sustainable social development, extra important.

“That is why we are proud of a high solvency ratio that provides stability in troubled times. Our traditional insurances also show a good resistance to the decline of the markets.

“When you look at the return figures, it is good to bear in mind that they are set against the turn of the year, which also constitutes the turning point for a proper rise, ever since the downturn caused by the Corona pandemic in March 2020.

“Since the turn of the year, the Stockholm Stock Exchange had fallen by approximately 25 per cent as of 30 September.”

Folksam director of investment, Marcus Blomberg, added: “The return in the portfolio so far this year has been negatively affected by rising interest rates and falling stock markets.

“During the year, we have seen interesting opportunities in various types of credit and have carried out new investments there.

“We have also increased our exposure to properties, both directly owned and indirectly owned. The real assets in our portfolio such as infrastructure and real estate have made a positive contribution during the year and partly balanced out the other asset classes.”

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