SWEDEN – Sweden’s Government Pension Board (SPV), the pensions administrator for government employees, has reported on the feasibility of fully funding its pension payments.
The board, tasked last year with calculating the effects of a shift away from the balance sheet method, has said a funded solution would reduce the volatility in liabilities stemming from mark-to-market accounting standards. Instead of the current system, premiums would be paid to SPV. Current value of the premiums would be SEK6.7bn (€799m).
SPV has not drawn up any into any proposals to fund such a solution, but a likely scenario would be to borrow the money from Riksgälden, the country’s national debt office.
The board has presented its findings to the government, in which it stated that it would be possible to change the pension arrangement from January next year and urged the government to take swift action.
How the assets of the new government fund would be managed has yet to be disclosed.
Meanwhile, pension provider Skandia has said it will spin off its in-house asset management team into a separate unit that will take over management of its life assets, a portfolio of some SEK300bn.
Skandia currently manages 50% of the assets in-house and the remainder, another SEK150bn, will continue to be outsourced to specialist managers. However, ALM, allocation and risk management will remain with the new unit, Skandia Investment Management.
The move comes after Skandia’s life and pension insurance arm bought out its owner Skandia AB from Old Mutual in March last year.
Skandia currently has SEK440bn in assets under management. The Swedish regulator, Finansinspektionen, has granted Skandia permission to start this company and it is expected to be up and running on May
Hans Sterte, head of asset management at Skandia, said the aim of creating a separate asset management unit was to increase its product offering and utilize in-house expertise in order to attract more customers. “Currently almost one in ten savings krona in Sweden is managed by Skandia and this will increase,” he said.
Skandia Investment Management will be headed by Lars-Göran Orrevall, currently head of investment strategy at Skandia. Orrevall said the initial strategy would be to focus on creating products based on some of the more unique or complex asset classes in the life portfolio and making them available through fund investments.