SWEDEN – The ongoing debate over the optimal number of national buffer funds in Sweden has so far been "too traditional", according to Peter Norman, minister for financial markets.

Speaking at an open debate in parliament on the AP fund inquiry, Norman said that if the optimal number of buffer funds were four, then Sweden should also have four national debt offices, or four foreign exchange reserves.

He said stakeholders should approach the inquiry as a "blank canvas", rather than fall back on "old solutions".

His comments were taken as tacit approval of an alternative solution presented by seven of the nine experts on the inquiry panel calling for a single AP fund, as opposed to the inquiry's official 'minimum of three' approach.

The proposals arising from the inquiry – directed by Mats Langensjö – were presented to the government in August and are now under consultation until 30 November, when the five-party working group on pensions is to prepare its own proposal.

The inquiry's proposals recommend reducing the number of AP funds to three and introducing a specific Pension Reserve Board (PRB) that, together with the Swedish Pensions Agency, will monitor buffer fund targets in accordance with the overall pension system's requirements.

Under this proposal, the PRB would be the owner of the assets.

Norman said it was important for future pensions that the AP funds be given the best possible opportunity to achieve long-term high returns.

He also stated that the buffer fund inquiry had conducted "solid work" in identifying possible improvements, particularly with respect to governance and investment guidelines.

But Kerstin Hessius, chief executive at AP3, argued that the buffer funds should be able to set their own targets, and that the thought of having a single entity interpreting their mission was "a frightening prospect".

She said the key would be to align the buffer funds with the general pension system and claimed that cutting those links would "create the wrong kind of governance".

As long as the buffer funds are given "freer and more appropriate investment guidelines", the current structure should remain intact, she said.

Other topics of discussions included how to deal with political interference and the integrity of the funds, the cost of asset management and whether investments should be national or global.