Swedish funds set to weather storm
SWEDEN - Pension funds look financially healthy enough to be able to ride out most of the negative effects of the current economic climate, according to research conducted by the Swedish Finans Inspektionen (FI).
Over 30 insurance firms and pension funds were examined using the FI's 'traffic light' model to assess the levels of risk exposure to extreme price fluctuations, whereby a capital buffer is calculated based on fair values of both assets and liabilities.
The FI said the pension funds and insurers involved should be able to withstand Swedish share volatility of 40%, a 35% fall in real estate prices, a 30% drop in interest rates and/or a doubling of the credit risk spread, or at least an increase of 25 basis points.
However, the report only went as far as the end of November 2007, meaning the sharp drops in markets witnessed in recent days were not taken into account.
The FI said the pension funds and insurers involved should be able to withstand Swedish share volatility of 40%, a 35% fall in real estate prices, a 30% drop in interest rates and/or a doubling of the credit risk spread, or at least an increase of 25 basis points.
However, the report only went as far as the end of November 2007, meaning the sharp drops in markets witnessed in recent days were not taken into account.
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