SWEDEN - Sweden’s pension agency Pensionsmyndigheten has argued that more attention should be paid to the level of pension contributions paid into the country’s pension system - rather than stock market performance - to assess the true health of its pension system.

Arguing that the five AP buffer funds - at SKK895bn (€42bn) - only accounted for around 12% of pension wealth in the Scandinavian country, the agency reiterated that the proposed 3.5% increase to the inkomstpension would still go ahead next year.

Assets from all buffer funds are invested specifically to cover the liabilities of all payments from the national pension system.

The agency added that the true indicator of the system’s health was the level of employment and therefore the height of contributions paid into pension schemes.

However, Annika Sundén, vice-chairman at AP1 and deputy director general of Pensionsmyndigheten, warned that it was “too early” to say how developments would impact 2013’s pension increase.

Ole Settergren, head of pension development at the agency, added that, based on estimates from the end of last month, the buffer funds still had sufficient capital to increase pensions by 3.2% in 2013.

He explained that it would take an “extreme” decline in the stock market, beyond what had been witnessed to date, to impact the level of pensions.

He added: “If the financial turmoil leads to an economic downturn like the one that followed the financial crisis of 2008, it could cause deterioration in pensions in 2013, but it is too early to predict.”

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