SWEDEN - East Capital has temporarily closed one of its funds in the Swedish national defined contribution pension system, known as the PPM.

The fund, East Capitals "Baltikumfonden", has closed for new customers as extreme inflows of capital last month, following positive ratings and favourable press, meant the fund was unable to place new deposits.

The limited equity market in the Baltic countries makes it hard for fund managers to expand the fund at the same rate as the Swedish pension savers demand. So East Capital has therefore decided to halt the inflows completely.

The same fund was closed for a short while at the same time last year and for the same reason.

The PPM DC system containing 800 mutual funds administers approximately SEK300bn in assets for five million Swedish pension savers.

In other news, pensioners in Sweden are more heavily taxed than pensioners in any of the EU 15 countries, USA, Norway and Australia. This according to a report published by PRO, the National Pensioners Organisation.

According to the report, Sweden is the only country among 18 where pensions are taxed at a higher rate than regular salaries.

According to the study, the pensions are taxed at 1 percentage point less then the same work income in Finland, 7 percentage points in Denmark and 6 percentage point in Norway.

According to PRO, the difference between an employee and a retiree in Sweden who had the same net income 2006 is now 9%, to the advantage of the employee.

The difference is even bigger in Germany, according to the study, at 18 percentage points while the difference in the UK is 15 points.

This story was first published by Pensionsnyheterna, a Swedish-language specialist news service, and translated in agreement with IPE.com

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