2020 was an unusual year that we will not forget in a hurry. In three weeks, for example, we saw tens of billions of kroner wiped off the accounts. Hotels and shopping malls were closed, and KLP went from five offices to a thousand.
Now, around a year later, the pandemic is still raging and strict measures to reduce infection are part of everyday life. But with good news on the vaccine front, we can see the light at the end of the tunnel. And that means we can also look back and note that, in spite of everything, we delivered better results than we might have feared when the pandemic struck in March 2020.
We provide pensions to employees in the Norwegian local government and healthcare sector, who are also our owners. These are the people who look after us, in kindergartens, hospitals and nursing homes, and in the emergency services. At KLP, we feel a great responsibility to take care of those who take care of us when they need it.
That is why we increased our lending limits to municipalities by NOK 5 billion when the turbulence was at its height, so they had access to financing at a difficult time. We granted a ‘mortgage holiday’ to people who needed it, perhaps because their partner had been laid off. We also found a good solution, together with the authorities, to enable us to help tenants in our shopping malls through a difficult time with reduced rents, without endangering the valuable support they get from the state.
And despite the uncertain times, we can celebrate good results for the last year, with stable operations and good returns to our owners. KLP delivered a return on customers’ funds of 4.2 per cent for the whole of last year. The book return ended at 4.8 per cent. Who would have thought that when the whole country locked down in March?
Fortunately, we had completed the big changes that arose out of all the municipal mergers before the pandemic hit us. We also had systems in place to deal with the new pension rules from the end of the year. This provides us with a basis for good guidance although it will be a good few years before it has any effect on pension payments.
As both public-sector occupational pensions and the pensions system itself are changing, we encourage public-sector workers to join the scheme before they retire. To facilitate access to information, we have a separate web page that we have called “My Page”, with its own pension guide. There you can check what sort of pension you will get if you stay in work, if you want to retire early, or if you draw a pension while you are still working. There is also a lot of useful pension information on klp.no. We are pleased to see that a good 50,000 members are visiting these pages each month, and we aim to improve them still further to benefit both employers and employees.
Through last year and into this new year, we have continued to improve and renew our pension systems. This is a long-term project with the goal of automating many of our processes, so our customers can get immediate answers wherever possible. It will provide a better customer experience, and also more efficient operation. This will allow us to go on reducing costs for our customers.
Although the pandemic is at the front of our minds, we must not forget the challenges we face in limiting greenhouse gas emissions and global warming. Based on the UN Sustainable Development Goals, we have chosen the targets we can influence the most and which our owners think are most important. Limiting global warming is the area we are giving the most attention to. We are continuing to direct our investments towards renewables, not least by increasing investments in renewable energy by at least NOK 6 billion a year. Last year we actually increased these investments by NOK 8.8 billion.
Managing over NOK 800 billion on behalf of our owners carries a great responsibility. Because KLP wants to contribute to sustainable development, we have been part of the UN Global Compact initiative, with its ten principles for socially responsible business, since 2003. By signing up, we have undertaken to follow up on these principles. Together with the UN Sustainable Development Goals, the principles have a bearing on how we manage our own business and on the expectations we place on the companies we invest in. This pays off for us and we find that, together with other investors, we are able to influence companies in a positive direction, which is very pleasing. It gives us pride and motivation in our day-to-day work.
I hope that you find the annual report useful and that you will get to know KLP better. Best wishes,