Kyrkans Pensionskassa, the pension fund for the Swedish Church, is adapting its strategic portfolio to account for lower return expectations, after first-half results for 2015 fell sharply compared with 2014.

In its interim report, the pension fund said its total return for January to June 2015 fell to 2.7% from the 8.7% achieved in the same period last year.

For the whole of 2014, the pension fund produced a 19.2% return.

The pension fund said it was changing its strategic investment aims because of the low-yield environment.

Carl Cederberg, Kyrkans Pensionskassa’s chief executive, said: “The lower yields mean it will probably become much tougher to achieve returns that will adequately match the pension fund’s liabilities.”

Because of this, the pension fund hae proactively changed its investment guidelines to minimise its sensitivity to rising market yields, he said.

“For this reason we have started to adjust the strategic portfolio for possible lower expected returns,” Cederberg added.

He said the pension fund’s financial position had strengthened over the latest six and 12-month periods, as a result of which, the bonus rate had been hiked twice and now stands at 14%.

It was an advantage for the pension fund to be in such a strong financial position given current low yields, as it increased the opportunity to take risk and allocate assets in the best way, he said.

Kyrkans Pensionskassa’s solvency level rose to 168% at the end of June from 162% at the end of December 2014.

Among the pension fund’s four asset classes — equities, fixed income, property and alternative investments — equities generated the highest return in the first half, with 10.7% compared to 10.3% in the same period last year.

Fixed income showed the weakest performance, with a 2% loss against an 8.4% profit in the first half of 2014.

On the business side, the pension fund’s premium income was up significantly in the first half of this year, rising to SEK560m (€58.4m) from SEK160m in the first half of 2014, and up from SEK185m in the whole of 2014.

Total assets grew to SEK14.9bn from SEK14.1bn.