SWEDEN - A group of multinational firms in Sweden is clubbing together under a collective defined contribution (DC) pension plan in a bid to bundle administration and asset management and to eliminate brokerage commissions.

The DC initiative, which was started in 1999 through co-operation between Anglo-Swedish pharmaceutical firm AstraZeneca and Swedish telecommunications group Ericsson, is now attracting interest from a further six or seven multinationals, according to observers, including Scandinavian airline SAS and clothing empire Hennes & Mauritz.

Michael Runnako, director for European pensions and international risk at AstraZeneca in Stockholm, explains that under the traditional defined benefit (DB) collective industry pensions agreement, companies have the opportunity to opt out for higher salary employees and establish a DC plan.
“ What we have done is to establish a common industry-wide plan with some bundled administration, asset management and the approach towards these unbundled approaches from insurance companies is to make them effective and minimise costs.

The primarily unit-linked joint arrangement with Ericsson began in December 1999 and has so far accumulated around SEK200m (e21m) in contributions.
Runnako, comments: “Many companies are looking to join this, like SAS and Hennes & Mauritz, particularly a lot of multinationals are looking to do this.
“ I’d like to see some changes to the insurance markets in Europe. We are changing the market for insurance companies in Sweden through these arrangements.

He notes that the advantages to firms include greater cost effectiveness and transparency and adds that the firms have managed to fully eliminate brokerage fees.

Runnako himself also takes up a new position with AstraZeneca from January 1 next year, graduating to the position of worldwide responsibility for the group’s pension arrangements.



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