Norway's KLP leans on buffer fund to shield member savings amid financial volatility

Norwegian pension company KLP has delivered a negative return of NOK 7.9bn in the first quarter of 2022, although it confirmed that "solid financial buffers" are in place to shield customers' pension savings.

Whilst the return on the collective portfolio was -0.75 per cent, the scheme confirmed that the NOK 7.9bn will be deducted from the buffer fund to deliver the return the company has guaranteed to its customers.

As a result of this, the scheme also reported a strong solvency capital adequacy of 332 per cent, with a total of NOK 902.9bn in assets, an increase of NOK 1.6bn.

KLP CEO, Sverre Thornes, commented: “The rise in interest rates and the introduction of a single buffer fund have contributed to the solvency being strengthened despite the fall in value in the stock market.

“We have solid financial buffers that shield customers' pension funds during periods of negative market movements, so we can withstand the turmoil we are experiencing now well."

In addition to this, Thornes explained that the rise in interest rates will give the scheme higher income in the future and will help to limit customers' pension costs.

“We can also be pleased that savings are still in the wind in the retail market and that KLP is for the first time the player in Norway that sold the most funds in the first quarter (NOK 4.5bn)," he added.

The company also provided an update on ongoing work to withdraw all investments in Russian companies amid the war in Ukraine, with a total of 22 different companies, where about a third of the shares (those listed in London), have already been sold.

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