Sweden’s new plan to revamp the management of its SEK2trn (€170bn) pensions buffer capital has won the backing of the independent expert who led a multi-year inquiry into the system 10 years ago.

Mats Langensjö told IPE: “I think its good, what’s happening – it is a delayed version of some of the conclusions we came to in 2012.”

Back then, Langensjö’s inquiry proposed merging the five buffer funds, AP1-4 and AP6, into three, but this was abandoned following resistance from some opposition parties and changed priorities.

The new review is a more limited exercise, with leader Tord Gransbo appointed as a bokstavsutredare (‘letter investigator’) to update the legal framework rather than canvassing new ideas from diverse stakeholders.

“I was surprised when this new review came up – you can be amazed about how things still are alive in the political system, even though you thought they had been totally buried,” Langensjö said.

“What I think is very important is they are putting some very serious thought into the capabilities and skills of the AP Fund boards, and their ability to make good decisions,” he said.

There was currently a view that the AP Funds – which include trade union and employer appointees – were too large with a lack of clear accountability, he said.

“I also think it’s good that they are clarifying AP6’s role,” he noted, referring to the smallest buffer fund, which invests only in private equity.

“It’s purpose is very vague and its also quite odd that they are part of the system and also not part of the system. It has grown into quite a big fund now,” he said.

The review tasks Gransbö with investigating how AP6 can be integrated into the buffer fund system, particularly the option of merging it with AP2 – echoing the 2012 inquiry’s conclusion.

The idea is still a good one, Langensjö added.

“It’s good for employees as well, even if they have been worried, because the fund can be given a clearer role, a more meaningful role in the system – that role is very undefined at the moment. They have no inflows and there are no outflows allowed by law,” he said.

Many of the elements to be investigated in the new review are issues that are overdue, he continued.

“They are things that should have been dealt with many years ago but, politically, it was a very locked situation – or perhaps during that period, politicians didn’t really bother about the AP Funds as much.

“Sometimes you don’t deal with things that are appearing to go well,” he said.

Langensjö is hopeful that, unlike his inquiry, the new exercise will lead to change.

“These are easy things to do, and now there’s a political unity around it, more or less,” he said, adding: “It’s going to be a chance to make it more efficient with better governance.”

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