THE SWEDISH PREMIUM PENSION SYSTEM

1
THE SWEDISH PREMIUM PENSION SYSTEM

• Daniel Barr,
• Chief Economist

2
DISPOSITION

• From DB-land to DC-country
• Activity
• Performance

3
FROM DB TO DC
4
FORMER STRUCTURE
First Pillar
Second Pillar
Third Pillar
Occupational schemes (DB, 90 coverage)
Tax efficient individual pensions (incl. mutual
funds, unit linked)
5
REFORMED NATIONAL PENSION SYSTEM
Premium pension (DC,funded) 2,5
Guaranteed pension (filling up)
Income pension (NDC, PAYG) 16
6
INCOME PENSION

• PAYG Notional DC
• Contribution 16 percent of capped income.
• Paid into individual notional accounts and
  indexed to average earnings

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)
8
PREMIUM PENSION

• Individuals can choose maximum 5 mutual funds
• Default fund invest on behalf of passive
  individuals

9
The Clearinghouse Model
Fund
Fund
Fund manager
Fund
Fund
Fund
PPM
Fund manager
Fund
Fund
Approx. 5,7 million pension savers
Fund
Fund manager
Fund
10
OPEN ARCHITECTURE

• Meet the requirements in the UCITS-directive
  (85/611/EEG)

11
ACTIVITY
12
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
13
SAME TREND IN OCCUPATIONAL SCHEMES
70
65,10
64
61,5
60
60
50
SAF/LO
PA03
PFA-98
40
36
34
33
33
31
30
29,7
27,70
24
23,90
23
22
20
17,60
17
14,10
10
Premiepension
9,40
8,40
0
1998
1999
2000
2001
2002
2003
2004
14
Active members share increases
15
ACTIVITY IN 401k-PLANS
16
FUND SWITCHES
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
18
VALSITUATIONEN
19
PERFORMANCE
20
Performance since 1995
21
Asset Allocation
22
Dispersion
23
ACTIVE RETURN BY INDIVIDUALS