High pension fees can create a “financial black hole” for savers by significantly reducing retirement income over time, according to Swedish pension provider AMF.

Writing in the Swedish financial newspaper, Dagens Industri, AMF chief executive Tomas Flodén and head of products, Roland Kristen, argued that fees often receive less attention than investment returns despite having a substantial impact on long-term pension outcomes.

“For those who save regularly over 30 or 40 years, fees have a very significant impact. High charges create a reverse compound-interest effect, where not only is the money paid in fees lost, but also the future returns that would have been generated on that money. The effect has sometimes been described as a potential financial black hole,” Flodén and Kristen stated.

New calculations from AMF showed that a saver who begins contributing to an occupational pension at age 35 and pays an annual fee of 1.25 per cent – the average charge for an individual occupational pension – would pay total fees over their working life that are 12 times higher than under a collectively agreed occupational pension scheme.

As a result, pension payments from an individual occupational pension would be almost one-third lower than those from a collectively agreed occupational pension, despite generating the same investment returns, they said.

“For a private-sector worker earning SEK 32,000 a month, the difference could amount to more than SEK 1,000 less pension income each month. For a white-collar employee earning SEK 65,000 a month, the gap could be as much as SEK 5,000 per month,” they stated.

Therefore, Flodén and Kristen said the collectively agreed occupational pension system should serve as a “model to follow” for the wider pensions market, arguing that its scale and procurement process have helped keep charges low while maintaining strong investment outcomes.

The comment comes as Sweden’s financial regulator, Finansinspektionen (FI), announced in April that it is reviewing the market for individual occupational pensions amid concerns that fees in these products are significantly higher than in collectively agreed schemes.

FI confirmed the review in its Consumer Protection Report 2026, where it stated that while premium pensions and collectively agreed occupational pensions benefit from lower fees due to procurement, equivalent funds in individual occupational pensions can be considerably more expensive.

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