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Skandia swallows AI Pension as small scheme faces spiralling costs

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The Swedish pension fund for architects and engineers, AI Pension, has agreed to a takeover by Skandia as it struggles to meet increasing regulatory costs.

Skandia will acquire AI Pension’s stock of insurance and operations, with the transfer expected to complete in the first half of 2019, pending approval from the Swedish Financial Supervisory Authority.

The takeover will leave the AI Pension name and brand in place, but the entire business will be run by Skandia.

AI Pension had SEK7.9bn (€756m) in assets under management at the end of June, and ran roughly 22,000 insurance contracts.

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Skandia, meanwhile, manages over SEK600bn for 2m customers.

Maritha Lindberg, AI Pension’s chief executive, said: “With the transfer, AI Pension’s customers will get stabler and safer operation of their insurance products.”

The change would give customers new opportunities and products in the long term, she added.

On its website, AI Pension said business conditions had changed in recent years, referring to its provision of Sweden’s collectively-agreed ITP white-collar occupational pensions.

The scheme said its active membership was set to decrease gradually because it was not permitted to provide insurance to those who have ITP 1 pensions – all those born after 1978.

On top of this, insurance premiums from those with ITP 2 pensions – which cover workers born before 1978 – would fall in the near future, the pension fund said.

In addition, the implementation of IORP II next year would require the scheme to hire more people AI Pension said.

“In total, this means that costs will increase, and will negatively impact customers and members,” it said. The deal with Skandia is designed to avoid this outcome.

AI Pension previously attempted a merger in February 2015, when a deal was on the table to combine with the press and media pension fund PP Pension.

However, talks failed a month later, with the two parties saying they had run out of time to find solutions for various matters, and that there were unanswered questions about future regulations that had not yet been resolved.

Skandia’s move to take over AI Pension’s operations comes shortly after the Swedish financial group decided to sell its Danish pensions business to AP Pension.

At the time, Frans Lindelöw, group head of Skandia, said the sale – alongside the earlier sale of its Norwegian banking operations – was part of its strategy to focus on its home market in Sweden.

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