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Since 2001, AP3 has operated under a parliamentary mandate to manage its fund capital in the best interests of the income pension system.

AP3 aims to achieve its target of an average real return of 4% over time by investing in a diversified global portfolio of listed equities, fixed income assets and alternative investments.

Over time, pension assets and pensions are calibrated with the income index to illustrate adherence with wage developments in society at large. The income index is a measurement of the average income in Sweden and is calculated on the basis of the average of all pension-entitled income for individuals aged 16-64.

 

Fund capital at December 31

At the inception of the new pension system in 2001 AP3’s fund capital was SEK 133,975 million. Up until 2008 the payments into the pension system exceeded the payments out of the pension system and since then a total amount of SEK 146 224 million has been paid out by the AP-funds in order to cover the deficits in the system.

 

 

Fund capital since inception in 2001, SEK m

The increase in fund capital since 2001 consists of transfers from special asset management and phase-out funds totalling SEK 6,938 million as well as SEK 205,729 million in asset management returns generated by AP3 and SEK – 22,267 million in net payments to the pension system. AP3 has been a net contributor to the pension system since 2009 and has thus far paid out a total of SEK 36,556 million.

 

 

Total return after expenses, %

The market during the period 2001-2008 was characterized by two major equity downturns, stressing the pension system during the first years. Despite the initial weak development AP3s annual nominal return after costs during the period averaged 5.7%.

 

 

Return after expenses 2001-2016, %

Pensions and pension entitlements are annually compared to the income index. In order to make a positive contribution to the pension system AP3 must grow at the same rate as the index. Income index since 2001 is 3% per annum. During this period, AP3s nominal return has averaged 5.7% per annum and hence, it has exceeded the growth of the income index with 2.7% per annum since the inception.