Sweden’s premium pension system is meeting the government’s recently decided target for the system to maintain a higher yield than the income index, the Swedish Pensions Agency (SPA) has found.

When evaluating the return, the SPA used the level of 2 percentage points higher yield than the income index as the definition of ‘clearly higher’.

It found that the target had been met for the system as a whole since 2014.

On an individual level, the target was met for 89.6 per cent of savers, with 97.2 per cent of pre-select savers meeting the target and 83.6 per cent of self-select savers meeting the goal.

However, the SPA said it was not clear whether the goal of increasingly stable payments had been met.

“The SPA assesses that the Riksdag's goal for the premium pension system, that the yield should be clearly higher than the income index, has been met,” commented SPA analysis department head, Ole Settergren.

“On the other hand, the pension authority has not succeeded in assessing whether the goal that premium pension payments should have low volatility, i.e. not vary from year to year more than can be considered acceptable, is being met.

“We will continue the work to find suitable limit values for the payout target.”

The SPA analyses the general pension system on an ongoing basis, but this is the first time the premium pension system has been analysed based on the law that was decided in 2022.

In the new law, there are yield and payout targets and a principle that the premium pension system must offer freedom of choice for savers.

To measure the level of freedom and choice, the SPA conducted a survey among pensioners, savers, and those who have just made a fund choice on the SPA website.

It found that 5 per cent of respondents and 14 per cent of active voters were dissatisfied with the freedom and choice offering.

“There were more who thought there were too many funds to choose from than who thought there were too few funds,” said Settergren.

“In future years' evaluations, we will be able to see the effects of the changed fund range.

“The new committee authority, the Fondtorgsnämnden, is now responsible for procuring, reviewing and quality-assuring funds for the premium pension fund market.

“The change will take place gradually and it will be particularly interesting to follow savers' perception of freedom of choice.”

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