Paying for regular advice on where to invest the Swedish premium pension is most likely “not profitable” for pension savers, according to the Swedish Pensions Agency.

“We advise pension savers not to let someone else, for payment, decide where their premium pension should be placed, as this often means high fees,” Swedish Pensions Agency analyst, Erik Ferm, said.

The premium pension is the part of the general pension that can be invested in funds. In connection with this, there are companies that offer investment or advisory services regarding premium pensions. Pension savers can also buy subscriptions to newsletters that contain advice on fund selection for the premium pension.

Those who do not make a choice themselves will have their premium pension placed in the state pre-selection option AP 7 Såfa. It is a global fund portfolio with low fees that is adapted to the saver's age and is structured to suit long-term saving, the agency said.

In a new report, the Swedish Pensions Agency has analysed the benefit of the advice for pension savers. For advice or the subscription newsletter to pay off, the value development of the pension must be extra high compared to AP7 Såfa in order for the saver to earn the fee paid.

“You will likely get a higher pension by keeping your premium pension savings in the state preselection option AP7 Såfa and save the annual fee for the advice or newsletter in a global stock index fund in an investment savings account,” Ferm said.

The Swedish Pensions Authority's survey shows that one in five pension savers have used an adviser who is not connected to their bank, in the placement of their premium pension. One in 10 savers stated that they have taken help from their bank. Just over one in four of those who have used an adviser or bank stated that they do not know the cost of the advice they received.

Over the years, a series of measures have been taken to increase consumer protection within the premium pension system. Among these are changed requirements when switching funds, a ban on telephone sales of pension advice and, most recently, the introduction of a procured fund market.

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