Sweden’s biggest pension fund AP7 could be handed an extra almost €10bn of pension assets to manage, over time, if official proposals unveiled yesterday to simplify the premium pension by having just one state pension decumulation product in the system are made law.
In his report on payment products and insurance forms in the premium pension system, Mikael Westberg, justice of Sweden’s Supreme Administrative Court, recommended phasing out the traditional, or with-profits, pension payout product managed by the Swedish Pensions Agency (Pensionsmyndigheten), leaving AP7’s unit-linked product as the only state-managed option for the decumulation of the premium pension.
The premium pension is a defined-contribution part of the state pension, which runs along the larger income pension. The government mandated Westberg to lead the inquiry a year ago.
Presenting the inquiry’s report, the Ministry of Social Affairs said: “The proposals are based, among other things, on the conclusion that AP7 Såfa [AP7’s default option in the premium pension system] meets the requirements that should be set for a state payout product, while traditional insurance currently does not.”
According to the report’s conclusions, in order for traditional insurance – as managed by the Pensions Agency – to meet the requirements that should be placed on a government payment product, it would need to be changed.
“However, the changes that are relevant in such a case would only make it even more similar to AP7 Såfa or lead to significantly lower pensions,” the ministry said, summarising the report’s main points, adding that the inquiry had therefore proposed the traditional insurance be phased out instead of implementing any such changes.
If the proposals are implemented in Sweden, AP7 potentially stands to take over the decumulation assets under the Pensions Agency’s management, which currently total SEK105bn (€9.5bn), compared to just over SEK200bn of premium pension decumulation assets under management by AP7.
Overall, AP7 had SEK1.8trn in assets at the end of June 2026, making it the country’s largest pension fund – with occupational pension provider Alecta, the second largest, recently having reported SEK1.46bn under management at the half-year stage.
In his report, Westberg said the proposals would entail the Swedish Pensions Agency instead developing a focus on its main mission. It was important, he told IPE, that the agency focused on administering and providing information about the public pension system.
“The agency should not engage in asset management, as this requires a very different set of skills and a different governance structure,” Westberg said.
“Among other things, it requires a board of directors and senior management with extensive expertise in investment management,” he said.
At AP7, chief executive officer Pål Bergström said his organisation welcomed “the thorough review of the payout phase of the premium pension system”.
“We will carefully study the inquiry’s conclusions and provide our views in our consultation response,” he said.
“We look forward to continuing the development of the default option, and in that work, our close and constructive cooperation with the Swedish Pensions Agency is absolutely essential,” the AP7 CEO said.
Meanwhile, Mia Liblik, head of communications at the Swedish Pensions Agency – who participated as an expert in the investigation – said the resulting work was “well written and presents a good analysis of what a phase-out of traditional insurance would entail”.
However, she also said there was a risk of rejecting the traditional insurance product too quickly.
“In my special statement to the investigation, I emphasise that it should have been investigated whether and how existing traditional insurance could be developed instead of being phased out, a conclusion that the investigation, in my opinion, reaches too quickly,” she said.
