SWEDEN – The president of the SEK151.4bn (€16.7bn) Swedish buffer fund AP4 – which underperformed its benchmark by three points in 2004 – has had his pay cut by almost five percent.

Thomas Halvorsen’s salary fell 4.9% to SEK1.79m in 2004 from SEK1.88m in 2003. AP4 returned 10.6% last year, compared to 10.9% for the benchmark.

Writing in Fjärde AP-fonden’s 2004 annual report, Halvorsen admitted the return was “less pleasing, especially as our target is to outperform the index by 0.7 percentage points each year”.

Meanwhile, Halvorsen and deputy managing director Björn Franzon are to be allowed to take their pensions earlier than planned.

“The president and the deputy managing director have agreed with the fund to reduce their previously stipulated pensionable age by two years in return for abstaining from commensurate salary increases,” the report stated.

Halvorsen is entitled to a pension worth 75% of full salary from age 58 to 65. Franzon is entitled to 75% of salary from 63-65. AP4 has SEK11m in pension liabilities for the two executives.

Halvorsen said the fund’s SEK29.3bn Swedish equities portfolio was a “major disappointment” because it was 2.7 points below benchmark. The scheme has since put in “special measures” to ensure an improvement.

On the wider outlook for the buffer fund system, Halvorsen said: “Though the speed of the recovery has surprised me, one should not be too over-optimistic about the system’s financial strength in the short term.”

He foresaw a “tough period” over the next five years.

AP4’s strategic portfolio in 2005 will comprise 61% equities (19% Swedish and 42% global), 37% fixed income and two percent real estate.

The scheme also said that Ulla Reinius and Carl Wilhelm Ros retired from the board in 2004 and were replaced by Kajsa Lindstahl and Ulrik Wehtje.

Göran Schubert was named head of performance and risk control in August.