AP3’s pension system mandate requires that we reach certain targets in terms of investment returns on the pension capital. A minimum average real return of 4% is needed to cover future pension liabilities and ensure the long-term financial health of the system.

The real return target is calculated based on forecasts for pension system assets and liabilities. A real return of more than 4% is seen as a guarantee for the system’s long-term financial health and sufficient to avoid the automatic balancing mechanism being activated. Trends on the financial markets over the last ten years have demonstrated how important it is for the AP funds’ performance not to fluctuate too strongly from year to year and made it apparent that we need to set a target limit for variation in returns. AP3 express this target by saying that the fund choose the portfolio with the highest risk adjusted return yields of 4% expected real return per annum.

AP3 investment philosophy, which forms the basis for the investment portfolio and asset management organisation. Read more here >>