Sweden’s second-largest commercial pension fund AMF announced it has decided to convert SEK17bn (€1.6bn) of the accrued surplus in its traditional pensions product into higher guarantees on its pensions.

The SEK800bn blue-collar pensions provider said it was making the move against the background of a good return for a number of years, and increasingly strong solvency, adding that its solvency ratio would fall by 15.5 percentage points as a result.

Johan Sidenmark, chief executive officer of AMF, said: “It feels good that we can strengthen the security of such a large proportion of our savers, not least in a situation where there is so much unease in the world.”

He added in the statement released this morning that the action it was taking showed the strength and long-term perspective of traditional pension management – a type of product which includes a guaranteed return.

AMF saying the move would strengthen guarantees for just over 500,000 of its customers in its traditional pension scheme.

“This is a way for us to live up to the promise that those who have chosen a traditional pension insurance plan with AMF will have a well-balanced level of risk without having to be active themselves,” Sidenmark said.

Roland Kristen, chief actuary at AMF, said the firm had among the strongest finances in the sector, and was confident that it would maintain good freedom of action in its asset management, and would thereby also be able to secure a competitive return in the future.

At the end of March, AMF reported its solvency ratio stood at 238%, up from 232% at the end of 2021.

Reporting a 4.8% investment loss for the first quarter, AMF nevertheless lauded the model behind the traditional pension product for being robust amid a turbulent market environment – saying it was characterised by long-term investment, risk diversification, low fees and a minimum yield guarantee.

AMF also offers unguaranteed market-rate products, particularly within Sweden’s first-pillar premium pension system.

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