The Swedish government will tomorrow, 22 December, vote on proposed pension reforms to the premium pension system.

The vote will decide on whether to implement the Legislative Council’s recommendations for the premium pension system; if successful, the amendments are proposed to enter into force on 1 June 2022.

Commenting, Swedish Social Security Minister, Ardalan Shekarabi, said: "We are now regaining democratic control over pensions and Swedish welfare. With a procured fund square, we ensure a high-quality pension saving that provides safer pensions.”

The reform relates to the fund marketplace in the premium pension system. The Legislative Council has recommended that a special authority, The Fund Marketplace Board, be created to manage the marketplace. This includes procuring funds and continuously reviewing the funds and fund managers available in the marketplace. The Swedish Pensions Agency will be the host authority of the Fund Marketplace Board.

It is argued that the reforms will make it easier to make choices about how premium pension funds should be managed. The proposals are based on a 2019 report, A better premium pension system, which found that the premium pension system should be designed so that it is only savers who really want to put together their own fund portfolios that do so.

The report found that preselection should be the starting point for all savers, and no activity or financial knowledge should be required, with savers being allowed to choose the level of risk they wish to take on.

If the saver does want to choose more than just the level of risk, the framework should allow them the opportunity to choose one more fund categories to place their funds.

However, the proposals have previously been criticised by The Swedish Investment Fund Association as they prioritise index funds over actively managed funds.

The association argues that it will be more complicated for savers to make their own funds choices, and even those who do want to make their own choice will be directed towards index funds.

In addition, analysis by the association of premium pension funds in different categories during different periods found that the returns on index funds are not as high as actively managed funds for funds in the same categories.

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