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THE SWED I SH PREMIUM PENSION SYSTEM

THE SWED I SH PREMIUM PENSION SYSTEM. Daniel Barr, Chief Economist. DISPOSITION. From DB-land to DC-country Activity Performance. FROM DB TO DC. AFP (flat rate pension). ATP DB PAYG (related to 15 best income years). FORMER STRUCTURE. First Pillar. Second Pillar. Third Pillar.

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THE SWED I SH PREMIUM PENSION SYSTEM

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  1. THE SWEDISH PREMIUM PENSION SYSTEM Daniel Barr, Chief Economist UK Visit Feb 2006

  2. DISPOSITION • From DB-land to DC-country • Activity • Performance UK Visit Feb 2006

  3. FROM DB TO DC UK Visit Feb 2006

  4. AFP (flat rate pension) ATP DB PAYG (related to 15 best income years) FORMER STRUCTURE First Pillar Second Pillar Third Pillar Occupational schemes (DB, 90% coverage) Tax efficient individual pensions (incl. mutual funds, unit linked) UK Visit Feb 2006

  5. REFORMED NATIONAL PENSION SYSTEM Premium pension (DC,funded) 2,5% Guaranteed pension (filling up) Income pension (NDC, PAYG) 16 % UK Visit Feb 2006

  6. INCOME PENSION • PAYG ”Notional DC” • Contribution 16 percent of capped income. • Paid into individual notional accounts and indexed to average earnings UK Visit Feb 2006

  7. Members choice THE SWEDISH PENSION SYSTEM First Pillar Second Pillar Third Pillar Occupational schemes (90% coverage, to a larger extent DC) Tax efficient individual pensions (incl. mutual funds, unit linked) Income Pension (PAYG) Premium Pension(DC, funded) GuaranteedPension(filling up) UK Visit Feb 2006

  8. PREMIUM PENSION • Individuals can choose maximum 5 mutual funds • Default fund invest on behalf of passive individuals UK Visit Feb 2006

  9. ”The Clearinghouse Model” Fund Fund Fund manager Fund Fund PPM Fund Fund manager Fund Fund Approx. 5,7 million pension savers Fund Fund manager Fund UK Visit Feb 2006

  10. 780 funds 83 fund companies OPEN ARCHITECTURE • Meet the requirements in the UCITS-directive (85/611/EEG) UK Visit Feb 2006

  11. ACTIVITY UK Visit Feb 2006

  12. NEW COMERS Proportion of new members that made an active choice UK Visit Feb 2006

  13. SAME TREND IN OCCUPATIONAL SCHEMES 70% 65,10% 64% 61,5% 60% 60% 50% SAF/LO PA03 PFA-98 40% 36% 34% 33% 33% 31% 30% 29,7% 27,70% 24% 23,90% 23% 22% 20% 17,60% 17% 14,10% 10% Premiepension 9,40% 8,40% 0% UK Visit Feb 2006 1998 1999 2000 2001 2002 2003 2004

  14. Active members share increases UK Visit Feb 2006

  15. ACTIVITY IN 401k-PLANS UK Visit Feb 2006

  16. FUND SWITCHES UK Visit Feb 2006

  17. Top ten funds 2006 (2000) UK Visit Feb 2006

  18. VALSITUATIONEN UK Visit Feb 2006

  19. PERFORMANCE UK Visit Feb 2006

  20. Performance since 1995 UK Visit Feb 2006

  21. Asset Allocation UK Visit Feb 2006

  22. Dispersion UK Visit Feb 2006

  23. ACTIVE RETURN BY INDIVIDUALS UK Visit Feb 2006

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