Sweden’s government has cancelled its reforms of the AP Fund system, following resistance from opposition parties.

A spokeswoman for Per Bolund, the country’s financial markets minister, confirmed to IPE that the closure of two of the SEK1.2trn (€126bn) system’s buffer funds had been “cancelled”, after the government and opposition parties failed to come to an agreement on the future of the reforms.

The reforms, which would have seen the closure of AP6 and a second, as yet-undecided buffer fund, have been criticised for risking “political micromanagement” of the system’s assets.

They drew scorn from both the Confederation of Swedish Enterprise – which said they would be “seriously detrimental” to the stability of the system – and Sweden’s central bank, which said they would make long-term investment “difficult if not impossible”.

The announcement comes after a meeting of Pensionsgruppen – the cross-party body, with representatives of the two government and four opposition parties, tasked with reaching a consensus on pension reform – failed to reach a joint position on the reform’s future.

The move follows several months of criticism from the opposition Liberal People’s Party (FP), which had signed off on the reform before proposals were unveiled this summer, and was in government in 2011 when the closure of two of the funds was first considered.

Within weeks of the proposals’ publication in June, FP leader Jan Björklund questioned whether his party could continue supporting them.

The idea of reforming the current system, comprising buffer funds AP1-4 and private equity fund AP6, was subject to an inquiry that, in 2012, recommended the government consider establishing a single buffer fund rather than retaining three.