The Swedish Pensions Agency has called for a discussion on what to do with the SEK 800bn income pension surplus that has built up.

The income pension system’s balance sheet, the ratio between assets and liabilities, is currently at 1.08 and has been higher than 1 since 2015. When the balance is below 1, liabilities exceed assets, and results in a ‘brake’ being applied to the indexation of the pension until the balance sheet is at 1 again.

Swedish Pensions Agency head of analysis, Ole Settergren, explained: "The balancing that comes in when liabilities exceed assets in the earnings-related pension is usually called the brake. But the pension system lacks rules for what should happen with a surplus – in addition to having the function of reducing the risk of negative balancing.

“Over the years, a buffer has been built up. Therefore, it may be useful to discuss whether the buffer should be reduced and, if so, how, when and to whom the surplus should be distributed. Not least against the background of the discussion about low pensions and fee increases that are being conducted.”

A report by the Swedish Pensions Agency concluded that surplus dividends could be implemented. Dividends could be issued according to political decisions and/or automatic dividends could be issued based on predetermined rules.

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