With a positive result of almost SEK 17 billion, the Fourth Swedish National Pension Fund’s (AP4) fund capital increased to SEK 348 billion - a new record level. AP4’s return, after costs, amounted to 5.2 percent for the first six months. AP4’s average annual return over the last ten years has increased to 6.5 percent after costs, which exceeds wage growth (income index) and AP4’s long-term return target by a wide margin.
Exceeds the return target and the income index
Over the past ten years, AP4 has returned 88 percent after costs. This equates to an average annual return of 6.5 percent, corresponding to a real return of 5.4 percent after adjusting for inflation, which exceeds AP4’s 4.5 percent long-term real return target.
Since the start, January 1 2001, the return after costs amounted to a yearly average of 6.0 percent. The return surpasses the income index, which increased by 3.0 percent annually. The income index is the basis for the accumulated liability of the income pension system. AP4 has contributed positively to the pension system’s assets and to the system’s stability.
AP4’s real return since launch, i.e. in addition to inflation, is 4.7 percent and exceeds the long-term target of 4.5 percent in real return. Refer to the graph on page one.
Listed shares more than half of total assets
The Board has determined that AP4 has the best opportunity of achieving the long term goal of high returns by holding a high proportion of listed equity.
Positive Government assessment
– The AP Funds have continued to contribute positively to the income pension system while simultaneously reducing costs compared to the previous year. This safeguards our future pensions, says Finance Minister Per Bolund, in a press release regarding the Government’s annual evaluation of the AP Funds.
The Government’s evaluation showed that since inception in 2001 through 2016, the AP Funds average return amounted to 5.6 percent per year - well above the income index during the same period, which increased by 3.0 percent per year. The AP Funds’ share of the income pension system’s assets has increased from 10 to 15 percent since the start.