SWEDEN - The premium income at Pensionsmyndigeten, the Swedish Pensions Agency, has increased fivefold to SEK968.8m (€101.6m) for the first half of 2010, compared with SEK190.4m during the same period last year.

In large part, the increase was a result of people moving away from funds, as they were reluctant to have their pension assets invested in riskier assets.

Total assets in the agency were SEK 3.2bn at the end of June compared with SEK1.8bn at the end of June last year.

Nearly three-quarters of the assets are invested in Swedish bonds.

Retuns were 2.6% for the first six months of the year, comparatively better than the loss of 4.1% incurred over the same period last year, while the solvency ratio increased to 139.1% compared with 131.4% during the same period last year.

The agency also showed the AP funds, the national buffer funds, saw fees and expenses increase during the first six months of the year.

During the period, the four buffer funds received assets of SEK101.4bn and made payments of SEK109.4bn, an increase of about SEK1bn.

Meanwhile, the social partners involved in the pensions negotiations for government and public sector employees are expected to announce the selection criteria for providers, and how members select these.

The new agreement will come into force from 2011 and concerns the assets to be paid into the system from that time.

Fees are expected to be lower than earlier envisaged.

However, the new structure will not affect money already in the system, and it will not be mandatory for members to select a new provider.

For a traditional pension insurance product, providers will be able to charge a maximum of SEK85 and 0.2% of the assets, including asset management fees.

For funds, the fees will range from 0.2% to 0.9% in eight different categories, including emerging market funds, country funds and hedge funds.

These fees are fixed and will be charged from the assets.

Providers can offer several funds in the same category, but the average fees cannot exceed the maximum limit in each category.

Funds will need high ratings, but with the average fee calculations, providers can offer more expensive funds if they also offer cheaper funds in the same category.

Providers will also be able to charge performance fees, but these cannot be higher than 20% of the excess returns compared with a relevant index.

A novelty for the government employees occupational pension solution is that fund of funds are also eligible to enter the system.

The fee structure for these products will have to show clearly how much the customer pays in total, such as underlying funds.

There is great interest among the Swedish providers to manage the government and public-sector assets for the 250,000 members.

Most large players signed agreements over the summer, whereas some smaller players have opted out because of the low fees.

In other news, the most popular benefit among Swedish women and employed people between the ages of 18-45 is a higher number of holiday days, according to Alecta, the pension and insurance provider. 

Alecta warns that this could be a disaster in the long run if people want more holidays rather than an occupational pension when they negotiate their benefits.

Some 25% of women and 27% of employees between the ages of 18-30 say they think more holidays is the most important benefit. 

Among those between the ages of 31-45, 26% agree.

In Sweden there are many employers without occupational pension agreements, and those without sufficient cover for old age will suffer if they continue opting for longer holidays rather than pensions, Alecta warns.

Finally, KPA, the pension insurance provider, saw assets under management increase to SEK76bn for the first half of 2010 compared with SEK64bn for the same period last year.

Premium income was SEK6.2bn for the period, roughly on par with last year (SEK6.3bn).

KPA pension insurance returned 3.7% for the first six months of the year, which was below the result for the same period last year (SEK 4.2%).

During the period, the firm's solvency ratio fell to 169% from 175% at the end of June 2009, while operational results fell from SEK14bn to SEK2.8bn as a result of the falling interest rate environment.

Folksam Liv, the pension and insurance provider returned 3.6% for the first six months of the year, which compares well with the same period last year when it returned 2.6%.

The improvement in returns was a result of a rally in the Swedish stock market and successful fixed income management.

The solvency level of the company fell slightly from 147.1%  to 144% for the first half this year.