Sweden’s Kåpan, which manages defined contribution pensions for public sector staff, made a return on its investments of 11.5% last year, up from 8.4% in 2013, but saw solvency levels weaken.
In its annual report, the pension provider said assets under management rose by SEK9.12bn (€978m) to stand at SEK69.37bn at the end of 2014.
The solvency ratio slipped back to 149% at the end of 2014, from 153% a year before, Kåpan said.
It said: “The weakening is due to a higher valuation of the organisation’s pension liabilities, which the year’s positive return on assets was not able to fully compensate for.”
Bond-related investments produced a return of 8.9% in 2014, up from 1.7% the year before, while equities generated 14.8%, down from 22.8%.
Alternatives — a class which is made up of venture capital funds, property, infrastructure and forestry and land — returned 14.4%, up from 5.9%.
Total premiums were SEK4.10bn last year, up from SEK4.01bn in 2013.
Meanwhile Kyrkans Pensionskassa, the pension fund for the Swedish Church, reported a big rise in investment returns in 2014 to 19.2% from 4.4% in the previous year.
Total assets climbed to SEK14.15bn at the end of last year from SEK12.16bn a year before, the pension fund said in its annual report.
The return was due in large part to the 17.2% profit generated on the pension fund’s fixed income investments, which make up nearly 60% of assets.
This return compares with the loss made on the asset class of 2.9% in 2013.
Equities produced a 22.7% return, down slightly from the previous year’s 23.9%, with foreign equity funds returning 29.9% and Swedish shares returning 16.8%.
Real estate produced a huge return on paper of 37%, compared to 2013’s 8.0% return, according to the annual report.
However, Kyrkans Pensionskassa explained that this apparent large profit was because of a one-off effect in 2014, due to the revaluation of its property investments.
The investments, which are all managed by collectively-property company Stenvalvet, were booked at market value last year, having previously been accounted for at their purchase prices, the pension fund said.
Premium income fell to SEK185m from SEK522m, the pension fund said, but noted this steep fall was largely due to changes in billing practices for defined contribution insurance.
This change had led to much of the 2014 premiums being billed at the beginning of 2015.
Kyrkans Pensionskassa’s solvency ratio was little changed at 162% in 2014, after 163% in 2013.