The Confederation of Swedish Enterprise has roundly rejected the main elements of the proposed reform of the country’s national pension buffer funds, saying the plan as it stands is a serious risk to the system’s stability.

In response to the current consultation on the reform, the organisation’s general director Carola Lemne said: “The Confederation of Swedish Enterprise’s view is that the memorandum’s proposals, if implemented, could be seriously detrimental to the stability of the public pension system.”

She said it would be better not to make any change at all than to implement the proposals.

AP funds 1 to 4 were working well, and able to fulfil the goals set for them, she said.

The cross-party agreement on the reform was announced during the summer and proposed merging AP6 with AP2 and closing a second fund.

The proposal also called for the creation of a National Pension Fund Board, able to set the level of risk taken within the system.

The consultation period on the proposals closes at the end of this month.

The confederation, Svenskt Näringsliv, rejected the memorandum as a basis for legislation unless essential elements are changed.

“The Swedish pension system,” Lemne said, “is designed to be stable over time, and the design provides security and legitimacy for their actual clients – the people who live and work in Sweden.”

She said Sweden boasted one of the world’s most stable pension systems.

“Because of this, you have to think carefully about every change to it, especially if the risk is obviously that the changes could damage the durability of the system,” she said.

In its response, the confederation said the number of buffer funds should continue to be four, as there were no real efficiencies to be had by reducing them to three.

However, it agreed that AP6, which invests in private equity, should be dismantled according to the proposals.

It also agreed that AP7 should change its name to the National Premium Pension Company.

The plan to set up a National Pension Fund Board, however, should be scrapped, as the proposed board is an unnecessary middle layer that adds nothing except ambiguity.

Svenskt Näringsliv said the current organisation and structure of the AP funds should be maintained, but that the governance and control of their management should be moved closer to Parliament, with a National Pension Council being set up to report to lawmakers.

The AP funds and the Swedish Pensions Agency should report annually on the state of the pension scheme to the National Pension Council, it added.

The confederation also agreed with the proposal that the prudent person principle should be implemented for the investment management of the AP funds.