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Swedish roundup: Buffer fund inquiry, AP3, DC transfer rights

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  • Swedish roundup: Buffer fund inquiry, AP3, DC transfer rights

SWEDEN - Kerstin Hessius, chief executive at AP3, has criticised the much-publicised inquiry into Sweden's buffer funds, arguing that the only change needed for the funds was the removal of "prescriptive" investment rules.

Speaking at a debate at the Kungliga Ingenjörsvetenskapsakademin (IVA) at the Royal Swedish Academy of Engineering Sciences, Hessius said the rest of the proposals went "too far", particularly the possible creation of a new overarching authority in the form of a Pensions Reserve Board (PRB).

She said the PRB would reduce the role of the AP boards, concentrate power into too few hands and be more susceptible to political interference than four separate buffer funds.

Hessius said the current structure would work perfectly well if "restrictive" investment guidelines were removed.

She rejected the possibility of a single long-term target that might apply to all the AP funds, adding that it would be impossible to pin down targets for asset management operations.

She also rejected the notion that three funds would be an improvement on four, and called for board members' remuneration - which has remained flat since 2001 - to be increased.

However, Mats Langensjö, who chaired the buffer fund inquiry, argued against relaxing investment guidelines, pointing out that to do so would require improved governance and a clearer division of roles.

Hessius acknowledged the governance issue, but said the inquiry had overstated its importance.

The AP funds and other pensions industry associations are to submit their comments to the government on the proposals outlined in the inquiry by 30 November.

In other news, the Life Insurance Inquiry, chaired by Tord Gransbo, has called for transfer rights for all defined contribution (DC) pensions.

The inquiry, recently submitted to financial markets minister Peter Norman, said transfer rights should be applied both to individual pensions and those agreed through social bargaining parties.

Gransbo suggested that the rules should be applied retroactively for private pensions, as well as for occupational DC pensions where premium payments have ceased because the individual has changed jobs, or where the beneficiary has died.

He argued that allowing an individual to move his pension capital to another company would increase consumer protection and have a "disciplining effect" on insurance providers.

The inquiry suggested new rules could be put in place as early as 2015.

The issue of transfer rights is a hot potato in Sweden, where large players such as Folksam, AMF and Alecta, which are owned by labour market social partners, dominate the occupational pensions sector.

Both providers and Sweden's trade unions have opposed the granting of transfer rights on a broad scale.

The unions argue that it will weaken their bargaining power, while the providers argue that it would fail to improve provision.

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