SWEDEN - The Swedish state pension system, including the AP funds, saw record returns for 2009 but still underperformed as a while, despite the positive performance.
Analysis of the annual report of the Swedish Pensions Authority, the so-called Orange Report, shows the system now has a deficit of SEK323bn (€33.2bn), as 2009 added SEK79bn to the previous year's deficit of SEK243bn. The state pension deficit is now equivalent to 4.3% of total pension liabilities.
The negative result for 2009 is because the fees paid into the system, which fell last year compared to 2008, do not cover costs. According to a spokeswoman, the numbers indicate that state pensions in Sweden will again fall next year by approximately 3.1%.
Despite the gloom in the state pension system, the country's premium pension system, with assets of SEK340.2bn, saw record returns of 34.7% - equivalent to SEK81bn - in 2009. Since its inception in 2000, the average annual return is 0.3%. And 58.3% of the total assets are invested in equities.
At the end of 2009, there were 88 asset managers offering 777 funds in the premium pension system, and in the last year 11 new fund managers registered, although six deregistered.
Some 56% of members in the system made an active investment choice, but their proportion of the assets is equivalent to 73.6%. This indicates that those who make an active choice, as opposed to leaving their money in the Premium Savings Fund, managed by AP7, fare better.
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