The head of Sweden’s PRI Pensionsgaranti said even though his firm can cope with the devaluation of its assets in the near-term, the combination of shrinking asset values and falling long-term rates is concerning for the whole pensions sector.
Jan Ahlström, chief executive officer of the Swedish occupational pensions firm, wrote in a company newsletter last week that there had been a big fall on financial markets, and the question was how his company would be affected.
“In the short-term, it means a devaluation of our assets,” he said, adding that PRI Pensionsgaranti could live with that, particularly in the near term.
“But the combination with falling long-term interest rates is worrying for the entire pension industry,” he warned.
Ahlström, who is set to retire at the end of this year, said PRI Pensionsgaranti ensured that companies’ pension commitments were fulfilled even if they become insolvent, and added that the firm had a long history of good results and that Swedish companies had performed well during previous business cycles.
“We can only hope we succeed in halting the contagion so that companies and production catch up as soon as possible,” he said.
However, he added that the coronavirus outbreak would of course leave its mark on growth.
Ahlström said his firm, which provides guarantees and administration for book-reserve pension schemes for blue-chips such as Volvo, Ericsson and AstraZeneca, was a well-consolidated and resilient company.
But he added: “There is every reason for vigilance until we know the true extent of the coronavirus.”