Sweden’s financial regulator, Finansinspektionen (FI), has launched an in-depth review of the growing number of occupational pension transfers, amid concerns that consumers may be encouraged to switch providers or investment types for reasons unrelated to their long-term pension outcomes.

Indeed, recent data from AMF found that Swedish occupational pension transfers passed SEK 200bn over the past decade, often without savers’ full awareness.

FI’s head of unit, Daniel Lundin, warned that the increasing number of occupational pension transfers could create “incentives” for financial firms, advisers and intermediaries to encourage customers to switch providers for reasons other than securing a better pension solution that truly meets their needs.

“If this is the case, it is of course serious. That is why it is urgent to scrutinise these moves more closely," Lundin stated.

Another risk that FI has recognised in relation to transfers of occupational pensions is the link between transfers of occupational pensions and offers of mortgage discounts.

Some providers are offering customers a lower mortgage rate if they transfer their occupational pension.

The regulator believes this raises questions about the appropriateness of linking occupational pension transfers to discounts on other financial services, and how consumers respond to such offers.

“Occupational pensions are often of great importance for an individual's financial security. It is therefore important that a transfer is only made if it leads to the insured person getting a better pension solution.

"Short-term benefits and discounts linked to other financial services should not govern the choice of occupational pension solution," Lundin added.

As part of the analysis, FI will meet with the insurance companies of the four major banks, with a particular focus on transfers that involve switching from traditional insurance to unit-linked (fund) insurance.

It also intends to send out questionnaires to a large number of life and occupational pension firms to analyse how these firms take consumers' needs into account when changing the form of management for collectively agreed occupational pensions.

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