The Swedish government could switch half the assets of its national insurance fund, some Skr300m ($37.5bn) into the state budget to cover government costs during the transition to a new pensions system which be-gins in 2001.

The assets of the giant AP-fund, which will be replaced by private premium reserve funds, would re-duce the government debt by a corresponding Skr300bn, thus diminishing the state interest cost.

The draft document was put forward by the department of fi-nance at the end of January and if converted into a bill could go before the Swedish parliament, the Riksdag, in June this year.

The money saved will then be used to finance pensions not in-cluded in the new pension system, and for covering pension fees or contributions to the new system for those who are ill or un-employed as these are guaranteed by the state.

The ministry says that the shift is neutral with the AP-fund technically delivering the bonds to the national debt office.The paper also includes an alternative proposal for a gradual shift in assets, where the AP-fund delivers some Skr20bn a year for the next 20 years to cover the deficit created by the new pensions system. Mikael Nyman