Investment returns at Oslo Pensjonsforsikring (OPF), the pension fund for city council staff in the Norwegian capital, slipped to 5.1% in 2015 from 7.5% the year before, but the organisation said it was able to increase its solvency coverage to 211%.
Reporting its fourth quarter and full-year results, the pension fund, incorporated as an insurance company, blamed the fall in returns on members’ pension savings on lower interest rates, as well as weak equities markets.
Åmund Lunde, chief executive at OPF, said: “Over many years, we have adjusted ourselves to lower interest rates by having strong solidity and a broad spread of investments.”
In absolute terms, the pension fund doubled its profit on pension activities to NOK752m (€78.6m) in 2015, from NOK327m.
The highest-performing asset sub-classes for OPF were infrastructure and private equity, producing returns of 13.2% and 16.2% for the full year, respectively, though it made a 6.1% loss on its holdings of high-yield bonds.
The fixed income portfolio – which made up 51.5% of the overall collective portfolio at the end of the year – generated 2.8% overall during the year, while real assets produced 7%, and ended the year making up 22.8% of the collective portfolio.
The equities portfolio returned 7.9%, and accounted for 25.6% of the collective portfolio.
Noting that the new Solvency II regulatory regime had come into force on 1 January this year, OPF said that, at 211%, its solvency capital ratio ended last year at twice the minimum allowed, but it also pointed out that, under the transitional rules now in place, its coverage ratio was in fact 362%.
Lunde said the pension fund had set itself the target of making the transition to the new solvency regime back in 2010.
“Through good results and by building up capital systematically, we fulfil the capital requirements by a good margin,” he said.
Total assets in OPF’s collective portfolio grew to NOK72bn by the end of December 2015 from NOK67.6bn a year before.