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.”
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