Sweden’s Left Party (Vänsterpartiet), which props up the current coalition government, has called for the policy-creating multi-party Pensions Group to be disbanded and for participation in the Premium Pension System (PPM) to become optional.
The two proposals form part of two new parliamentary motions, each backed by nine of the party’s MPs in Sweden’s parliament, the Riksdag.
In a motion submitted on 6 April, MP Ali Esbati said the party wanted to see the Riksdag regain control over pension policy from the Pensions Group.
He said: “The Left Party is strongly critical of the fact that pension issues, which are absolutely crucial for citizens, are handled by a closed group without the possibility of transparency or influence for outsiders.”
The Pensions Group consists of representatives from the five parties behind the 1994 pensions agreement: the Social Democrats, the Moderates, the Centre Party, the People’s Party and the Christian Democrats.
In a second motion, submitted by Left Party MP Nooshi Dadgostar on 23 April, the party said the PPM was a mandatory fund savings arrangement and certain groups of savers could therefore be particularly vulnerable.
The PPM forms part of the first-pillar state pension system, but investors can choose their investments. Those who do not choose are invested in AP7’s default fund, Såfa.
“The significant proportion of the population who in one way or another lack knowledge or interest in financial savings end up at a disadvantage, but still need to take risky decisions about their premium pension,” the party said.
“The Left Party does not believe that the premium pension system should be a mandatory system,” it said. “It currently works mainly as a lucrative business model for managers.”
More pension system criticisms
The motion, which drew on criticisms made about the PPM in a recent report from the National Audit Office, said the Swedish Pensions Agency’s discount model did not work as intended.
“There are, among other things, shortcomings in the reporting of commission fees while there are indications that fund-of-fund solutions and hidden index funds are used to circumvent the discount model,” the Left Party contended.
The motion also compared the system to the default pension option, AP7 Såfa, and found the PPM to be 37% less efficient on average in generating pension capital.
In its recent report, the NAO called for greater cost transparency in the PPM. However, this appeal was rejected by the government as the PPM was already undergoing significant reform.
The Left Party – which says it stands for “an equal Sweden, for feminism and for the climate” – also called for the government to oversee the cost effectiveness of the PPM marketplace and propose ways to supervise it.
Although not a member of the government coalition agreed in January after months of political wrangling, the Left Party has agreed to give limited support to prime minister Stefan Löfven’s two-party coalition.