​Nordics roundup: OPF turns in 10.2% gain and plans to boost buffers

Norwegian municipal pension fund Oslo Pensjonsforsikring (OPF) declared 2021 to have been a good year in its annual results statement yesterday, posting a total return on investments of 10.2%, and saying it intended to transfer more customer profits to its buffers.

Åmund Lunde, OPF’s chief executive officer, said: “2021 turned out to be a good year for us and our customers. The economy recovered very quickly after the pandemic.”

The pension fund had invested during the market decline in 2020, and this has given it and its customers a “formidable” gain in 2021, he said.

OPF’s full year return amounts to NOK10.27bn, and compares to 7.9% and NOK7.28bn in 2020.

Of the different asset classes in the pension fund’s investment portfolio, illiquid shares and funds – which made up 11% of assets at the end of 2021 – produced the second highest return at 23.9%, while hedge funds, with a 1% allocation, returned 25.6%, according to the report.

Meanwhile, amortised cost loans and bonds, with a 23% weighting, gave a 3.0% return over the year.

Lunde said new challenges were emerging for 2022.

“We began to prepare for inflation in the autumn of 2020, and in 2021 it became a factor for investors again,” he said, adding that it would be intriguing to see how the markets handled an economy where interest rates rose.

The CEO said that with new regulations for life insurance companies starting from this year, OPF would be able to hold back more of the customer result as solvency and therefore create a higher return for customers.

OPF’s solvency capital adequacy, calculated without the transitional rules, fell to 314% at the end of 2021, compared to 471% a year before, due to the NOK4.2bn transfer of customer profits to customers’ premium funds, in accordance with the rules, OPF said in its annual results statement.

Total assets for the group rose to NOK126bn at the end of 2021.

KPA and parent Folksam report pension returns of 13.7% and 13.0%

In Sweden, municipal pension fund KPA reported that its annual return rose to 13.7% in 2021 from 4.8% the year before, and that it had reduced the CO₂ footprint both of its own business and its equity portfolio during the year.

KPA’s solvency ratio increased to 204% in 2021 from 172% the year before, and assets under management grew to SEK264bn from SEK223bn, according to the results statement.

The pension fund also reported that CO₂ emissions from its own business shrank to 40 CO₂e in 2021 from 44.6 the year before, while the weighted average carbon dioxide intensity of the equity portfolio had fallen to 5.3 tonnes CO₂e per million SEK from 7.1 in 2020.

However, the pension fund said the published key carbon figures for the portfolio only gave a snapshot its greenhouse gas emissions, and went on to list several limitations of the data available.

KPA is 60% owned by the insurance and pensions group Folksam with the remaining 40% held by the Swedish Association of Local Authorities and Regions.

Folksam itself reported a 13.0% return for the occupational pensions portfolio of its unit Folksam Liv in 2021, with the group saying its return had been primarily driven by the positive development of the stock markets.