New Agency Takes on Management of Swedish Pensions

BNA reports that a perceived lack of coordination between the nation’s Social Insurance Agency, (Forsakringskassan) and the Premium Pension Authority (PPM), led the government to approve in April 2009 a new law allowing the formation of the new Swedish Pensions Agency (Pensionsmyndigheten, or SPA), which is charged with administering the state income pension, supplementary pension, premium pension, and guaranteed pension. Swedish taxpayers contribute around 16% of their total annual salary into these plans, BNA said.

The establishment of the new system abolishes the PPM and transfers all pension-related activities of the Social Insurance Agency to the SPA. Lena Larrsson, an SPA official, told BNA that the new agency will help cut waste and improve customer service – areas in which the former system, under which two public bodies shared administrative control, had been deficient.

Also on January 1, a new law took effect changing the terms of the nation’s premium pension plan, an income-based investment plan that is part of the national state pension, according to the news report. Under the plan, 2.5% of each taxpayer’s annual salary and other taxable payments are invested in up to five mutual funds chosen by each pension holder from more than 700 private funds offered by the government. Currently the default option is a global share fund with equal risk for all ages, but under the new rules, specific default investment options will offer a level of risk better suited to each individual’s age and financial requirements.

The new law also gives savers who actively choose their investments fund choices from more suitable risk profiles determined by the Seventh Public Pension Fund, the body charged with managing premium pension investments. BNA said the new law also allows authorities to charge pension savers for shifting their investments between approved funds, as long as the fees do not discourage savers from periodically reviewing their portfolios.