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​Alecta beats benchmark in 2018 despite 3.5% loss

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Sweden’s largest pension fund has revealed a 3.5% investment loss last year for its defined contribution (DC) pension product.

In preliminary financial figures for 2018, the DC default portfolio Alecta Optimal Pension ended the year down 3.5%, compared to the previous year’s 9.1% return.

However, the SEK878bn (€84bn) pension provider said the DC return was still 1.1% above the return from the Morningstar benchmark it used.

Meanwhile, the firm’s defined benefit (DB) scheme reported a 2% loss for the year, compared to a positive 6.5% result in 2017.

At a group level, Alecta’s solvency ratio fell over the year to 161% at the end of December 2018 for the group, from 174% a year before.

Magnus Billing, chief executive of the pension fund, said: “Despite a turbulent year for the markets, I am pleased that Alecta remains strong.

“We have both lowered the fees and signalled a strengthening of the premium reduction for tens of thousands of employers.”

The company said costs for various insurance products that formed part of its occupational pension services had been reduced in the course of last year, including premiums for group occupational life insurance TGL, which fell to SEK29 a month for individual employees, from SEK32.

During the year, Alecta said it had also increased pensions for its ITP2 DB scheme by 2.12%.

Earlier this year, Alecta won new 5-year contracts within Sweden’s supplementary private-sector occupational pension system (ITP), including the renewal of its contract as default provider within traditional insurance.

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