UK Visit Feb 2006 1 THE SWEDISH PREMIUM PENSION SYSTEM Daniel Barr, Chief Economist.
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Transcript of UK Visit Feb 2006 1 THE SWEDISH PREMIUM PENSION SYSTEM Daniel Barr, Chief Economist.
UK Visit Feb 2006 4
FORMER STRUCTUREFirst Pillar Second Pillar Third Pillar
Occupational schemes (DB, 90% coverage)
Tax efficient individual pensions (incl. mutual funds, unit linked)
AFP (flat rate pension)
ATP DB PAYG
(related to 15 best income years)
UK Visit Feb 2006 5
REFORMED NATIONAL PENSION SYSTEM
Premium pension (DC,funded) 2,5%
Income pension (NDC, PAYG) 16 %
Guaranteed pension (filling up)
UK Visit Feb 2006 6
INCOME PENSION• PAYG ”Notional DC”• Contribution 16 percent of capped income.• Paid into individual notional accounts and indexed
to average earnings
UK Visit Feb 2006 7
THE SWEDISH PENSION SYSTEM
First Pillar Second Pillar Third Pillar
Tax efficient individual pensions (incl. mutual funds, unit linked)
Occupational schemes (90% coverage, to a larger extent DC)
Income Pension (PAYG)
Premium Pension(DC, funded)
GuaranteedPension(filling up) Members
choice
UK Visit Feb 2006 8
PREMIUM PENSION
• Individuals can choose maximum 5 mutual funds
• Default fund invest on behalf of passive individuals
UK Visit Feb 2006 9
”The Clearinghouse Model”Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund manager
Fund manager
Fund manager
PPM
Approx. 5,7 million pension savers
UK Visit Feb 2006 10
OPEN ARCHITECTURE
• Meet the requirements in the UCITS-directive (85/611/EEG)
780 funds 83 fund companies
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NEW COMERS
Proportion of new members that made an active choice
Year 2000 2001 2002 2003 2004 2005 2006
Active 67,0% 27,6 % 14,1% 8,3% 9,4 % 8,0% 7,4 %
UK Visit Feb 2006 13
SAME TREND IN OCCUPATIONAL SCHEMES
60%
33% 33%
24% 23% 22%
17%
31%29,7%
27,70%
23,90%
17,60%
14,10%
8,40% 9,40%
64%
36%34%
61,5%
65,10%
0%
10%
20%
30%
40%
50%
60%
70%
1998 1999 2000 2001 2002 2003 2004
SAF/LO
PFA-98
Premiepension
PA03
UK Visit Feb 2006 14
Active members share increases
50%
55%
60%
65%
70%
75%
2000 2001 2002 2003 2004 2005 2006
Individuals Capital
UK Visit Feb 2006 16
FUND SWITCHES
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
2000 2001 2002 2003 2004 2005 2006
UK Visit Feb 2006 17
Top ten funds 2006 (2000)
Fund Market Value Market Share
1 (1) Premiesparfonden (Default) 78 857 410 995 29,5%
2 (5) AMF Pensions Aktiefond - Sverige 9 210 050 130 3,4%
3 (3) AMF Pensions Aktiefond - Världen 7 905 309 778 3,0%
4 (6) Didner & Gerge Aktiefond 7 060 960 558 2,6%
5 (4) Robur Aktiefond Pension 7 032 194 890 2,6%
6 (9) SPP Generation 60-tal 5 072 854 562 1,9%
7 (8) SPP Generation 50-tal 4 675 274 882 1,7%
8 (75) HQ Rysslandsfond 4 098 189 396 1,5%
9 (2) Robur Contura 3 929 719 442 1,5%
10 (11) AMF Pensions Balansfond 3 549 845 638 1,3%
UK Visit Feb 2006 18
VALSITUATIONEN "I have enough knowledge to manage my premium pension"(18-62 years old)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2005
2004
2003
(5) Fully agree
(4)
(3)
Dont know
(2)
(1) Fully disagree
UK Visit Feb 2006 20
-10%
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-6%
-4%
-2%
0%
2%
4%
6%
8%
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%
Premiepensions-systemet
Inkomstindex
Performance since 1995
UK Visit Feb 2006 21
Asset Allocation
Svenska aktier38,3%
Utländska aktier52,6%
Svenska räntor7,0%
Utländska räntor2,2% (2,4%)
(6,6%)
(53,1%)
(37,9%)
UK Visit Feb 2006 22
Dispersion
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Less than 0%
0 - 2%
2 - 4 %
4 - 6 %
6 - 8 %
8 - 10 %
More than 10%
Share of total num ber of individuals
Pass ive Active