SWEDEN - KPA Pension, the SEK50bn (€4.8bn) Swedish public-sector pension company, returned 7% on its investments in 2008, despite the global economic downturn, IPE has learnt.

Last year was one of the best in terms of performance for the Stockholm-based pension fund since it returned 10.2% in 2005.

This means KPA Pension's savers will receive a 6.3% rate of return on their pensions investments.

The fund, which champions ethical investing, claims its interest rate hedging programme and its large fixed income portfolio - which did particularly well in the last quarter of the year - were the main drivers of its success in 2008.

Its asset allocation saw 37% of the fund invested in equities in 2008 - though it has gradually been reducing the portfolio - however this generated a negative return of 30.5%, while a 2% holding in alternatives delivered a return of -1.1%.

The bond portfolio, covering 60% of all assets, returned 31%, while real estate  - representing 2% of the assets - saw a 1.5% return.

Bertil Repfenning, managing director of KPA, said: "We are pleased and proud to be able to increase the return on pension funds, not least in view of the global slowdown."

KPA Pension is one of the three Swedish providers which is tasked with mainly looking after pensions for municipal and county council staff.

KPA is 60% owned by Swedish insurance company Folksam while the Swedish Association of Local Authorities and Regions holds the remaining 40%.

This contrasts an earlier statement from pensions firm AMF Pension, which said there is a significant risk it will have to cut its dividend rate, according to a statement by AMF's CEO Ingrid Bonde. (See earlier IPE story: Swedish default fund loses over a third)

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com