SWEDEN – Swedish high-tech engineering group, Sandvik, has transferred more than SEK1bn from the company balance sheet into a funded corporate pension plan to meet its pension commitments to salaried employees in Sweden, with the assets to be invested in both Swedish and international markets.

A formal tender for the management of the money has yet to be announced.

The decision, which was made following a meeting of the Sandvik board of directors, will see Sandvik's companies in Sweden shifting SEK 1,069 M - a sum corresponding to the companies' total pension liabilities, into the new Sandvik Pension Fund.

The statutes of the fund have been submitted to the local supervisory authority, the Gävleborg County Administrative Board, for approval.

The firm says its employees benefits will be unaffected by the establishment of the new fund, adding that its liability towards current and retired employees is similarly unaffected.

“ The assets of the Pension Fund constitute a collateral for the Sandvik companies' pension commitments toward salaried employees. The establishment of this collateral means that the corresponding pension liability is eliminated from the Sandvik balance sheet. Total assets and liabilities are affected only marginally, however, since the provision is principally financed through loans, “ Sandvik notes.

The objective for the investment of the fund’s assets, Sandvik says, will be to generate an average return exceeding the financial indexing of the pension liability of approximately SEK 50 M per year. It is estimated that the funding of the scheme’s assets will result in lower pension costs for the company.