The Swedish blue collar union LO, with 2m members, is embroiled in a row with its former allies in the bank and insurance business. It start-ed when LO declared that they would create a new unit-linked life company with mutual insurer Folksam Life.

The new office was to receive the blessing of LO and be recommended as a best choice" to about 1m privately employed members. This autumn, all LO members will be able to choose which life office they want to entrust their pensions premiums.

The new LO/Folksam office was said to offer "the safest and most inexpensive way to a good service pension" but when former LO ally, Förenings-sparbanken, found out about this move it immediately filed an application to start a new unit linked company. This is virtually a declaration of war with LO, if the plans are realised.

"If they open up a life office of their own they will become competitors and we will not recommend them to our members", says Hans Karlsson, secretary of LO.

Föreningssparbanken is arguing that the free market was agreed upon by LO when the treaty for the new pensions was reached and now finds the LO argument somewhat "Russian".

"First they want to create an open market with free competition and when that is done they do not trust their members to choose", says a representative of Föreningssparbanken.

Both LO, Folksam and Föreningssparbanken claim that they are still willing to negotiate a solution to the problem, but it is considered to be an unlikely outcome. Karlsson says: "For those wanting a traditional life product AMF Pension is the alternative. But if they want unit-link, LO/Folksam is the alternative. Mikael Nyman"