Investment principles statement

The Board has various policy management tools to hand to be able to realise these commitments and ambitions. One of these tools is the investment policy. The objective of the investment policy is to reach the highest possible return while keeping within the risk limits fixed by the Board and taking into account the long and short-term commitments of the pension fund, the solvency requirements set for the fund and the ambition of a stable contribution and indexation policy.

For the longer term the fund has established a strategic investment policy which is in line with the fund’s objectives and policy principles – including the risk attitude – and is based on the pension fund’s investment beliefs, thorough study, such as the ALM study and the feasibility test. In addition to the strategic investment policy, the fund also pursues a dynamic investment policy. Following a dynamic investment policy means that we are able to benefit from imbalances on the financial markets.

A carefully diversified investment portfolio should lead to the above objective being realised in the long term. This is considered more important than short-term volatility of the funding ratio, although an attempt is made to limit the short-term volatility when choosing the investment mix. This is why the Board chose as one of its policy principles that a certain level of uncertainty regarding the protection of a minimal funding ratio of approximately 105% should be accepted when selecting and establishing an investment mix. The fund’s Board decided on this attitude toward risk in consultation with the Social Partners (representatives of the pension fund members and the employer) and the pension fund’s representatives, thereby taking into account the principle of a stable balance of interests. The interests of persons entitled to a pension are obviously protected by the representatives of persons entitled to a pension on the Board and the pension fund bodies.

The investment portfolios are monitored with regard to observance of the established investment guidelines and evaluations are made in order to control the risks involved.

In this respect it is important that alternative Board management tools are implemented in the event of a reserve shortfall and funding deficit, i.e. the contribution and indexation policy. Implementing pension cut backs (temporarily) is one of the Board’s most extreme policy options. The effect and use of the remaining Board management tools are detailed in the ABTN.

The Board manages the tools it has available in a befitting manner (in accordance with the prudent person rules).