SWEDEN – The board of aviation firm Saab AB has approved the allocation of roughly SEK2.5bn (€265m) to a new pension fund, the Saab Pensionsstiftelse.

The decision is effective from December 31, and the new pension fund is expected to be in operation by the first quarter of next year.

This means that together with Saab’s corporate pension fund – established in 2004 and managing funds of about SEK570m – the pension funds will secure pension obligations of approximately SEK3.1bn, said a press statement released today.

According to Saab, the main objective of this transaction is to hedge the interest rate volatility of the pension liability, and reduce the overall cost of pensions.

“The deconsolidation of the PRI (Pensions Registration Institute) liability will reduce assets by SEK2.5bn, which will have a positive impact on some key ratios,” it added.

Corporate treasury head Peter Sandehed said: “By creation of a separate pension fund we will also enhance financial flexibility and gain a more transparent balance sheet, easier to analyse and in line with international practice.”