Swedish roundup: Pensionsgruppen, PPM review, Swedish Pensions Agency
SWEDEN - Pensionsgruppen - Sweden's multi-party working group on pensions - has set the agenda for the internal review of the country's defined contribution system, PPM.
The review was announced at the end of last year, but now a detailed agenda has been set to tackle a number of perceived deficiencies within the system, such as the vast differences in returns that can occur among members.
Also on the agenda is the question of whether the premium pension system, by allowing investments in the capital markets, has created the "upward push" in relation to the income-related state pension that was hoped for.
The review will look into whether the set-up of the system is optimal. One issue that has been widely debated for some time is whether the large number of pension funds - some 825 at last count - is the best way to create choice for savers.
The review will consider the increasing exposure to equities - both within the PPM and among occupational pension funds - and what impact this might have on risk.
It will also look into the systematic differences that occur between savers that make only one choice and never change again and those who are more active.
The review will not be a governmental enquiry but rather an internal report that will make recommendations.
Although the mandate is open, the PPM system is unlikely to be scrapped, however, as several of the parties in government have no desire to change the system fundamentally.
Pensiongruppen is expected to reveal who is to head the review some time later this week.
In other news, savers in the PPM who did not switch fund providers during 2011 achieved better performance than those who switched more than 15 times during the year.
According to statistics from Pensionsmyndigheten, the Swedish Pensions Agency, those who did not change funds returned -8% for the full year 2011.
This was better than the average for the system, which returned -8.6%, whereas those who swapped more than 15 times returned -13.7%.
Almost one-fifth of investors or savers in the system changed funds during the year.
Mats Öberg, head of the fund unit at the agency, said it was important to bear in mind that the premium pension was only a small part of the state pension, and that 9 out of 10 Swedes had access to occupational pensions.
The government alternative within the system, managed by AP7, runs more than a quarter of total assets in the pensions system.
Some 6.4m Swedes are part of the PPM, with SEK402bn (€45bn) invested.
Since launch, the funds have returned 2.6% per year. The management fees in the system were 0.37% for those who actively select their funds and 0.15% for the AP7 alternative.