​Alecta welcomes Swedish FSA’s decision to probe pension transfer risks

Sweden’s biggest occupational pension fund Alecta has welcomed the decision by the country’s financial watchdog to launch a probe into the risks around the booming market for pension transfers, amid concerns that savers are being lured to switch for the wrong reasons.

The Swedish Financial Supervisory Authority (Finansinspektionen, FI) said in its latest consumer report that it will scrutinise transfer activity of occupational pensions and how it affects consumers this year.

In the report released on Wednesday, FI said: “There is a risk that the growing market for transfer of occupational pensions creates an incentive for financial companies, advisers and others to recommend customers to transfer for reasons other than that the insured person will receive a better pension.”

There was a risk around the link between the transfer of occupational pensions and offers of low mortgage interest rates, it said.

“We believe the conflicts of interest that cross-selling can entail are problematic,” FI said, adding that consumers could end up making choices or buying financial products that disadvantaged them.

The authority pointed out that the Swedish Pensions Agency (Pensionsmyndigheten) has prevented such cross-selling within the premium pension system by introducing a linking ban.

Much of the recent boom in pension transfers in Sweden has been away from traditional providers such as Alecta and AMF and towards banks.

Staffan Ström, pension economist at Alecta, told IPE: “We welcome the fact that the Swedish supervisory authority will review the rapidly growing volume of transferred pension capital, and in particular look at offers linked to lower interest rates on mortgages.”

The SEK1.3trn (€118bn) pension fund published a report this week on how private-sector employees transferred occupational pensions in 2024, noting that offers of discounts on mortgages and other products had become more common when moving, Ström said.

“The right to transfer is a natural and important feature of defined contribution pension plans, and if you are a default company like Alecta, it is completely normal to have net transfers out. But transfers linked to cross-selling risk leading customers into products they don’t really want,” he said.

Meanwhile, AMF has said it had been following the pension transfer market closely since 2016, and that between one in three and one in four occupational pension transfers since then had happened without the customer’s knowledge.

Johan Holmer, press officer at the SEK840bn blue-collar pension provider, said the discounts on financial products used as incentives to transfer were often temporary, while the occupational pension was long-term, so higher fees could have a major impact on the final amount.

“We strongly believe that the occupational pension is too important for one’s future livelihood to be used as a negotiating tool for various types of discounts,” Holmer told IPE.

Last autumn, FI held talks with large pension providers at its office in Stockholm over the issue.

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