KPA Pension said it estimates two-thirds of people moving their workplace pension savings scheme are unaware they are losing their guarantee in the process.
The Swedish municipal pension fund is adding its voice to the ongoing debate around the increasingly large volumes of occupational pension savings being transferred from one provider to another in the Nordic country.
The subsidiary of pensions and insurance group Folksam said more and more people were moving their savings in a collectively-agreed occupational pension, and that the amount of capital migrating had almost doubled in five years.
The SEK337bn (€29.3bn) pension fund said a report it had conducted showed that two-thirds of people moving their pension did not know that they were moving away from a savings account with a guarantee to a savings account without one.
Fredrik Eklöf, head of labour-market organisations and education at KPA pension, said: “The right to transfer is good in itself, but it necessitates the organisations involved becoming better at informing people about the differences between the various options so customers can make well-founded choices.”
The report revealed most pension transfers involved a shift away from a default occupational pension provider to major banks.
KPA Pension said it assessed that the volume of pension transfers would continue to increase over the next few years.
It said the new AKAP-KR pension agreement, with greatly increased premiums for municipal and regional employees, ramped up the incentives for banks to target this customer group.
“Risk awareness is often low and it should be made easier to compare the different options,” KPA Pension said.
The pension fund said that as an organisation, it had a big responsibility, but said that banks and insurers also needed to explain clearly to customers what a move to them would mean.
On Monday, Sweden’s financial watchdog held a roundtable discussion on the issue of occupational pension transfers, having called major occupational pension providers to its Stockholm offices.
The Swedish Financial Supervisory Authority (FSA) has warned there were signs industry players were encouraging people to move for reasons other than individuals getting a better pension.
Daniel Barr, director general of the Swedish FSA, said after the meeting: “Occupational pensions should only be moved if it is in the consumer’s interest.
“Today, the industry has given its view on the matter. How the companies work with this is something we will follow up on in our ongoing supervision,” he said.
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