SWEDEN- The 197 billion-crown (21.4 billion-euro) pension provider AMF Pension has called the Swedish pension system launched in 2000 a “fiasco”.
AMF Pension, owned jointly by the Confederation of Swedish Enterprise and the Swedish Trade Union Confederation, also called for the government to inform the Swedish public more thoroughly on its pension options and for politicians to take on more responsibility.
A spokeswoman for the pension provider told IPE today that the public does not grasp the pension reform devised by the government in 2000. Each worker, she said, is required to pay between one and two per cent of salary into an investment fund of their choice.
But workers tend not make a choice and have their contributions paid into the PPM, the Premium Pension Authority. The PPM offers free choice to 86 fund managers and 664 funds.
AMF has forecasted that by 2009 only 50% of workers will make a choice, and in 15-20 years the percentage would plummet to 20%.
Young workers, AMF said, are required to make a choice about their pension provisions very early in their careers. It suggested that workers should make a choice only when they have accrued 10,000 crowns in a PPM account.
As things are now, young workers pay contributions of about 500-600 crowns to a chosen pension provider but they simply “do not bother” the spokeswoman explained.
Politicians should promote interest in the system and should take responsibility for the choices made in 2000, AMF also argues.
An advisor to finance minister Gunnar Lund said the government had been “surprised” at AMF’s criticism. The government, the advisor explained, has already acted by appointing a commission of experts headed by economics professor Karl-Olof Hammarkvist.
“The government has also given him directives to evaluate if the costs of the system are justifiable, if the number of funds to choose between are satisfactory and if there are any measures to be taken that could facilitate for the customers when choosing a pension fund,” the advisor said.
The inquiry should end by October 2005.