SWEDEN - The Swedish pension system lost SEK82bn (€8.7bn) in 2007 following a fall in contributions and an increase in payouts, the Swedish Social Security Agency (Försäkringskassan), has revealed.

However, the five Swedish pension buffer funds - AP1, AP2, AP3, AP4 and AP6 - accounted for 12.8% of the total assets in the Swedish pension system at the end of December 2007.

In the annual Orange Report 2007, the Försäkringskassan revealed the net result for 2007 was a loss of SEK82bn (€8.7bn), which reduced the surplus within the pension system from SEK100bn in 2006 to SEK18bn in 2007.

The report suggested the negative figures were the result of the pension liabilities increasing faster than the contributions, while the assets were also reduced following a decrease in the "turnover duration" - how long the money stays in the system.

Figures showed pension contributions fell from SEK233.6m in 2006 to SEK218.5m, and the effect of a decrease in turnover duration was minus SEK21.6m, while at the same time pension disbursements increased from SEK176.4m to SEK186.1m.
However, the Orange Report showed the AP funds contributed "positively" to the system with assets of SEK898bn - an increase of SEK41bn from 2006 - to account for approximately 12.8% of the total assets in the pension system.

The report revealed the buffer funds achieved an overall return of 4.4% to produce a profit of SEK38bn, in addition the pension contributions exceeded the payments, which after the deduction of administration costs accounted for a further SEK3bn increase.

As a result, the report revealed, the balance ratio measuring the financial position of the pension system at December 31 2007 was 1.0026 - down from 1.0149 in 2006 - which means assets exceeded liabilities by just 0.26%, compared to 1.49% in 2006.

That said, as the ratio remained above 1.0000 the balance mechanism - which reduces indexation on pensions for the following financial year if liabilities exceed assets - this means the mechanism will not be triggered.

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