SWEDEN – The Swedish arm of pharmaceutical multinational AstraZeneca is to transfer around SEK2.2bn (e232m) from its balance sheet into a pension foundation, which could be outsourced to external managers as early as the beginning of next year.

The firm is the latest in a line of Swedish companies to scrap their book reserve commitments in favour of funded arrangements.
Earlier this month, Swedish high-tech engineering group, Sandvik, announced it was transferring more than SEK1bn into a funded corporate pension with the assets to be invested in both Swedish and international markets.

Michael Runnako, director for European pensions and international risk at AstraZeneca in Stockholm, says the firm has been looking at the issue for more than six months and discussing how the foundation should be organised.
“We have taken an executive board decision to establish a pension foundation instead of having the book reserve method.
“ What we are now discussing is how to organise, in particular, the asset management of the foundation in order to meet our pension liabilities – whether we should do it internally or if we should outsource it.
“ We hope to finalise this within the next couple of months.”

The fund will be a defined benefit (DB) pension plan under Swedish collective labour law and receives employer contributions only.

Runnako says the main advantage of switching to a foundation will be the long-term focus on asset allocation to cover the liabilities and the management of assets to meet these liabilities.
“ We don’t do that under the book reserve method,” he notes.