Sweden’s AI Pension fund for architects and engineers made an overall loss last year as it increased technical provisions, despite lifting investment returns to 13.2% from 8.2%.

In its 2014 annual report, the pension fund — previously known as Arkitekternas Pensionkassa — reported an annual loss of SEK54m (€5.8m), down from a profit of SEK1bn the year before.

The fund said: “First and foremost, the result was affected by the increase in technical provisions, but also by a good return on capital.”

Fixed-income investments returned 8.8% over the year, up from the loss suffered in 2013 of 1.9%, while equities produced a 21.7% return, down from 27.9% the year before.

Property generated 15.6%, up from 9.1% and hedge funds produced 1.5%, down from the previous year’s 6.0%, according to the annual report.

Premium income increased by 10% to SEK237m from SEK216m.

Total assets grew to SEK6.24bn at the end of 2014 from SEK5.54bn, the published data showed.

AI Pension said its financial position remained strong, even though the solvency ratio had fallen as a result of the continuing decrease in interest rates to 141% at the end of 2014, from 152% a year before.

The funding level for defined benefit plans was unchanged at 131% while funding for defined contribution products had increased to 111% from 106%, it said.

The pension fund explained that its council had decided on a new funding policy during the year for both AI ITP and AI Life pensions, with the change prompted by the new interest rate curve to calculate technical provisions.

It decided the new curve would be used for both pension types.

For AI ITP, the normal funding level was increased to 130% from 120%, with the calculation changing from one based on a fixed interest rate assumption of 3% to floating interest rates.

This meant it was now necessary to have a higher level of normal funding as well as a broader funding range, the pension fund said.

Within AI Life, the normal funding level was revised down to 105% from 110%, with the the funding range unchanged at 100-115%, it said.

AI Pension in February announced its intention to merge with PP Pension, the pension fund for the press and media, by early next year, but was later forced to abandon the proposal due to time constraints. 

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