The Swedish Pensions Agency (Pensionsmyndigheten) has revised its prediction for a significant fall in the main component of the state pension, now announcing the value of the income pension is set to fall by 0.5% in 2022, rather than by 2.7% as the authority had forecast earlier this year.
Ole Settergren, head of analysis at the Swedish Pensions Agency, said: “The corona crisis has so far not affected the pension system more than a sharp economic weakening would have done.”
In Sweden’s pay-as-you-go income pension system, benefits are adjusted annually according to changes in wages.
In addition to this, an automatic-balancing mechanism is applied if the system is in imbalance – with liabilities being greater than assets, for example.
Settergren said the agency would not normally announce its forecasts for income pensions publicly, but had made an exception this year due to the great interest in how the crisis was affecting pensions.
“Our forecasts have varied unusually sharply during the year. The reason is that the assessment of the pandemic’s effect on income has varied,” Settergren said.
The agency also announced its 2021 revision for the income pension, which it said would now increase by 0.5% in January, along with supplementary pensions, down from the prediction rise of 0.8% in July.
The other element of the Swedish state, or general pension, is the premium pension, which is a system of individual accounts where people invest in privately-run funds or via the AP7 default fund.
SPK reallocation supports 7.3% YTD return
Swedish banking sector pension scheme Sparinstitutens Pensionskassa (SPK) said its move to shift assets from bonds to equities this year was one factor behind its 7.29% return for January to September.
SPK said in its interim results statement: “The market development has been dramatic during the period due to the corona pandemic, but SPK has so far coped well with the turbulence.”
This was partly due to a relatively-cautious risk profile at the beginning of the year but also thanks to an active reallocation from fixed income to equities, starting gradually at the end of March, the fund said.
In the third quarter of 2020 alone, SPK’s return was 5.24%.
The firm also attributed its resilience this year to its selected external asset managers, who it said had provided “very good contributions”.
SPK reported the solvency ratio for its defined-benefit pension scheme was 139% at the end of September.
Länsförsäkringar market-rate product contributions up 18%
Swedish pensions and insurance group Länsförsäkringar reported an 18% increase in contributions for its unit-linked pension product (Länsförsäkringar Fondliv) in this year’s third quarter.
Mathias Collén, Länsförsäkringar Fondliv’s chief executive officer, said: “Premium income increased by 18% during the third quarter and we made another stable result.”
The firm said the market-rate product — the product which is still open to new customers — saw an increase in assets under management to SEK162bn (€15.7bn) at the end of September from SEK151bn at the same point in 2019, with total premium income increasing to SEK8.4bn from SEK7.1bn.
Meanwhile, total assets for Länsförsäkringar’s guaranteed-rate pension product (Länsförsäkringar Liv) — which is closed for new business — fell to SEK112bn from SEK115bn and produced a total profit of SEK100m, down from SEK2.4bn in Q3 2019, the firm reported.