More frequent pension allocations could provide SEK 1bn boost for savers

More frequent distribution of premium pension rights could provide a SEK 1bn boost for Swedish pension savers, analysis from the Swedish Pensions Agency has suggested.

The calculations were part of work the agency is doing on behalf of the Swedish government to investigate whether pension rights can be allocated earlier.

Currently, inheritance gains and premium pension rights are allocated once a year.

However, from 2025, inheritance gains will be allocated monthly.

The expected profit from investing the funds earlier,according to the Swedish Pensions Agency, is expected to total SEK 400m per year, in the form of increased returns on pension savers and pensioners' funds.

Over the long term, these measures are also expected to yield a 2 per cent annual increase in the premium pension.

In addition to this, the Swedish Pensions Agency found that more frequent distribution of premium pension rights, from just one allocation in December to three times a year, could provide approximately SEK 1bn per year in return to pension savers.

In the long term, this change could raise the premium pension by, on average, SEK 200 per month for a newly retired person.

"By allocating inheritance gains and also premium pension rights more frequently in the future, the money is invested in the saver's chosen funds for a longer period of time,” Swedish Pensions Agency chief actuary, Erland Ekheden, said.

“This exposes the money to higher risk and an assumed higher growth as a result. In the long run, the pension is therefore expected to be slightly higher.”



Share Story:

Recent Stories


Podcast: Stepping up to the challenge
In the latest European Pensions podcast, Natalie Tuck talks to PensionsEurope chair, Jerry Moriarty, about his new role and the European pension policy agenda

Podcast: The benefits of private equity in pension fund portfolios
The outbreak of the Covid-19 pandemic, in which stock markets have seen increased volatility, combined with global low interest rates has led to alternative asset classes rising in popularity. Private equity is one of the top runners in this category, and for good reason.

In this podcast, Munich Private Equity Partners Managing Director, Christopher Bär, chats to European Pensions Editor, Natalie Tuck, about the benefits private equity investments can bring to pension fund portfolios and the best approach to take.

Mitigating risk
BNP Paribas Asset Management’s head of pension solutions, Julien Halfon, discusses equity hedging with Laura Blows

Advertisement