SWEDEN – Swedish labour and employer groups have started talks over a new ITP plan - which could see the €40bn occupational pensions firm Alecta open to competition.

The Confederation of Swedish Enterprise and the Federation of Salaried Employees in Industry and Services (PTK) have commenced the negotiations.

According to Alecta’s interim report, the criteria for the new negotiations include a defined contribution plan.

“If this is the final result, it will mean considerable changes for Alecta and our customers,” said Alecta president Tomas Nicolin.

“We will, of course, continue to manage the old ITP Plan for a long time at the same time as taking advantage of the opportunities in the new plan.”

Hans Gidhagen, pension lawyer at the enterprise confederation said the changeover could take “a very long time”.

“Worst case scenario, it could take 37 years,” he told IPE.

The confederation has been moving towards a change for approximately 10 years. According to Gidhagen, the process had been in a “holiday period” for two years before the PTK came on board.

IPE understands that wider choice has been pinned as one of the key factors motivating the negotiations for change.

According to an Alecta spokesperson, it is too early to tell whether there will be any significant loss of clients.

Nicolin moved to dispel any fears of this in the interim report, saying Alecta has a “strong financial position” and the introduction of the traffic light model would do little to dent the firm’s ability to make good returns.

Furthermore, the president highlighted the fact that Alecta enjoyed the “lowest costs in the industry” last year with 0.24% in management costs.

Alecta released its third quarter results this week, showing an 11.5% total return on investments in the first nine months – up from 8.3% in June.

Equities were reported as the asset class with the highest return during this period with 23.3%. Profit after tax amounted to SEK26.9bn (€2.8bn), and investment income accounted for SEK39.8bn.

The market value of investments on 30 September stood at SEK386.1bn.