SWEDEN – Occupational pensions provider Alecta has posted a 2.5% return for the first quarter of 2005 – but says it is cautious about full-year returns.

“Total return for the first quarter of 2005 was 2.5%,” it said. Its collective funding ratio was 131% at the end of March, which exceeds the level in its funding policy.

“The good return in our investment portfolio means that the company’s financial position has recovered from the stock market falls in 2001 and 2002, said president Tomas Nicolin.

But he added: “I believe there is reason for caution as regards total return expectations for the rest of the year.

“Market interest rates have fallen to almost historically low levels while equities and real estate have gained value and performed strongly for some time.

“Together these factors limit the return potential when we look ahead. We have chosen a lower proportion of equities than our competitors among the life insurance companies.”

Alecta said there were several factors that could affect the funding level in the future.

These included a SEK4.9bn (€535m) reserve to be placed at the disposal of the collective agreement parties – which would cut the funding level by about 2.5 percentage points.

Another factor was the risk of lower discount rates resulting from falling market interest rates, Alecta added.

Alecta has assets of around SEK450bn and handles the major part of the ITP occupational pension plan on assignment from the Confederation of Swedish Enterprise and the Federation of Salaried Employees in Industry and Services.