Nordic roundup: Danish pension policy, Swedish premium pension, Lærernes Pension

Denmark’s pensions and insurance lobby has welcomed government plans for a formal labour-market cooperative body which will involve a review of pension policy, and called for a return to previous conditions allowing earlier pension payout starts for private schemes.

Jan Hansen, deputy director of Insurance and Pension Denmark (IPD), said in a statement today: “We support extending the discussions on retirement schemes to all [pension] schemes.

“It is a unique opportunity to give a complicated system, which has developed piecemeal over many years, a service overhaul,” he said.

In a drive to improve Denmark’s labour supply, the three coalition parties in Prime Minister Mette Frederiksen’s government have proposed the establishment of a permanent tripartite institution in which the Danish Trade Union Confederation (Fagbevægelsens Hovedorganisation, FH), the Confederation of Danish Employers (Dansk Arbejdsgiverforening, DA) and the government can discuss key policy areas.

Issues up for discussion, according to an outline of the plan published in a column in newspaper Politiken last month, include merging the two early-retirement schemes – the senior pension and the early retirement pension, also known as the Arne pension – into one scheme, and flexibility around work for older people more generally.

Hansen said it was particularly important to achieve efficient and smooth interaction between public and private pension schemes.

IPD said it was looking particularly at the complicated rules around the earliest point at which Danes could receive their pension. Currently, this age follows the state pension age, but is three years earlier than that for newly-created schemes, according to the industry organisation.

Until 2018, it was possible to start pension payout five years before the state pension age, and before that, there had been a right to start taking the pension at the age of 60, it said, adding that there were good arguments for giving savers the opportunity to begin taking a pension from their own scheme five years before the national pension.

“An adjustment of the pension rules will provide additional flexibility around retirement and ensure interaction with senior schemes – the so-called ‘free choice schemes’ – in the private collective agreements,” Hansen said.

“At the same time, the current system, where many Danes have pension schemes with different payout ages, will become much simpler to understand – and to advise on for the pension companies,” he said.

Swedish agency uncertain about volatility of premium pensions in payment

The Swedish Pensions Agency (Pensionsmyndigheten) said today that while the new yield goal for the premium pension system set by the country’s parliament’s (Riksdag) had been met, it could not yet say whether payments to pensioners were stable enough from year to year.

The Stockholm-based authority made the remarks around today’s publication of its first evaluation of how the premium pension – the defined contribution part of the state pension – is meeting its target.

Ole Settergren, head of the agency’s analysis department, said: ”The Swedish Pensions Agency 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.

“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,” he said.

Settergren said the agency would continue the work to find suitable limit values for the payout target.

Although the Swedish Pensions Agency analyses the state pension system on an ongoing basis, it said this was the first time the premium pension system was being analysed based on new legal text from 2022, which introduced yield and payout targets as well as a principle that the premium pension system had to offer freedom of choice for savers.

To evaluate the yield target, the agency said it used the definition of “clearly higher” as being two percentage points higher than the income index, and that this target had been deemed to have been met for the system as a whole since 2014.

Regarding freedom of choice, the definition contained in the new legislation was that pension savers had to be able to influence their level of risk and investment orientation, it said.

To measure this, the agency said it had carried out a poll of pensioners and pension savers, and found that only 5% of the representative sample and 14% of active responders were dissatisfied with the offer.

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

These results are interesting given that the choice of funds offered within the premium pension system is in the process of shrinking considerably under the new procured system currently being built up by the new Fund Selection Agency (Fondtorgsnämnden, FTN).

“In future years’ evaluations, we will be able to see the effects of the changed fund range,” Settergren said.

Lærernes Pension commits SEK600m to Slättö real estate fund

The DKK146bn (€19.6bn) pension fund for doctors in Denmark, Lærernes Pension, has committed SEK600m (€52.4m) to a property fund managed by Nordic real estate private equity firm Slättö.

In a statement from the property firm, Tobias Friis, head of alternative Investments at Lærernes Pension, said: “Lærernes Pension believes that Slättö has the required expertise and experience to achieve our investment goals and sees them as a strong partner going forward”, praising the firm for having a “strong historical track record, high standards within ESG” and unique Nordic focus.

Slättö described Lærernes Pension as a “significant new investor” and said its existing investors included family offices in the Nordics and institutional investors such as Nordea Life & Pension.

The firm said it invested thematically, and saw the main opportunities in the current market as being within logistics and light industrial as well as special situations.

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