The Swedish regulator has voiced concern after a postal service company withdrew SEK900m (€94m) from its pension fund and quadrupled its discount rate.
PostNord, the Swedish and Danish postal services company, raised the discount rate for its Swedish defined benefit scheme to 4%.
Göran Ronge, actuary at the Swedish financial regulator’s (Finansinspektionen or FI) market conduct supervision division, said the company’s decision to increase the discount rate may not endanger scheme members’ pensions in the short run, but the longer-term effect was less clear.
“There is now a stress on the pension foundation to provide a financial result of 4% a year, which might be not so easy to achieve, for example in a situation of [falling] equity values,” he said. “A 10-year state bond in Sweden has a market yield of 0.8% at the moment.”
PostNord uses a combination of book reserves and a pension foundation to secure its occupational benefits, with the foundation holding around SEK19bn, according to Swedish newsletter Pensionsnyheterna.
In 2016 the company raised its pensions discount rate to 4% from 0.8%, which helped reduce its pension debt significantly, the newsletter reported.
A spokesman for PostNord Group said the company had been reimbursed roughly SEK900m for the pension payments it made into the scheme for 2015, in connection with the end of the 2016 accounting year end.
According to PostNord’s annual statement, the change of the discount rate was made during 2016 and would take effect on 2017 liability valuations, Ronge said.
The company said its pensions foundation, which covers employees in PostNord Group and PostNord Sweden, had changed the basis of its pension liability calculations to those of specialist provider PRI Pensionsgaranti following negations with trade unions.
PRI Pensionsgaranti is an occupational pensions organisation that provides credit insurance and administrative services.
“The compensation was made in full compliance with the Swedish Insurance Act, which regulates this type of pension management,” the PostNord spokesman said. “PostNord’s ability to honour pension obligations is not compromised.”
He added that the pension fund’s consolidation level amounted to 134% at the end of June.
Ronge said this matter was supposed to be supervised by company auditors in Sweden, rather than by FI, as the regulator had obligations to provide regulations but not to supervise supervise them.