Alecta, Sweden’s biggest pension fund, today posted investment gains of more than 2% for January to September as its reported year-to-date returns entered positive territory for the first time this year – and its asset total passed the SEK1trn (€97.5bn) milestone.

In its interim report, the pension fund – which manages the ITP pension scheme for private-sector employees – said the return on its defined benefit (DB) plan was 2.1% for the first three quarters of 2020, up from -1.1% for the six months to June.

The default portfolio in the defined contribution (DC) Alecta Optimal Pension, meanwhile, produced a 2.4% return for the period, up from a 2.2% loss at the half-year stage.

Alecta said its total capital under management reached SEK1trn at the end of September, up from SEK963bn at the end of June.

Magnus Billing, Alecta’s chief executive officer, told IPE the main reason for the increase in its assets under management in the last three months was due to strong returns from equities.

“But Alecta’s share of the market for competition-exposed premiums related to savings in occupational pension schemes is still strong, which also contributes to our growth in assets under management,” he said.

Contribution levels remained “pretty solid” for 2020, he said, despite the economic problems of COVID-19.

“The Swedish system in which Alecta operates, where most employees have collectively-agreed occupational pensions, has not been that negatively affected by the current economic situation,” Billing said.

The pandemic is not likely to cause any fall in contributions to Alecta’s schemes in the next 12 months, he said, but added that growth would be affected by the levels of wage increases agreed in the current collective-bargaining round.

Billing said Alecta was sticking to its current investment strategy.

“We have a five-year plan to increase our allocation to real assets, in order to meet the challenge from the low interest rate environment. During Q3 we have continued to execute that plan,” he said.

Assets under management in Alecta’s DB scheme grew to SEK849bn at the end of the third quarter from SEK797bn at the same point in 2019, while DC assets rose to SEK158bn from SEK131bn.

The provider’s group solvency level rose to 162% by the end of the third quarter from the 157% reported for end of June, and above the 159% figure of 30 September 2019.

The funding level for the DB scheme rose to 144% at the end of September from 142% 12 months before.

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