SWEDEN - The amount of changes made within pension funds managed by the defined contribution PPM system increased dramatically last year, as 4.5 million changes were made compared to 3.2 million in 2008 - an increase with 41%. Yet within the SAF-LO blue collar pension plan, a third of individuals decided not to make an active investment choice.

According to the PPM, this huge increase is because more people now appoint financial advisers to care of the process of changing funds.


This has created problems for smaller fund managers who say they risk enormous outflows and inflows of assets as advisers can handle thousands of accounts simultaneously.

The PPM had an ongoing project known as 2k which was designed to smooth flows through prolonged trading and early warnings to managers. However, this has caused some debate as it also presents advisers with a "key" to the backdoor the state pension system, which in turn enables banks to take over the management of some of the first pillar premium pension system.

The 2k system is now under the scrutiny of the newly-created Pension Authority, which began practising in January this year, and decision on the future for the 2k trading system will be presented this month.

At the same time as concerns about management of PPM was raised, figures showed the amount of money saved by 6.2 million people in the Swedish national DC system increased to SEK340bn by the end of 2009, compared to SEK231bn in 2008.

 The premium income distributed via funds in the PPM system amounted to SEK29.6bn.

The administration division of the PPM system has predicted premium income will increase further, to SEK30.8bn this year.

Elsewhere, approximately a third, or 35% of members within the SAF-LO Swedish blue collar pension plan did not make an active choice about their pension investments and instead opted for the AMF default, according to the scheme's administrator, For a.


Just under two-thirds, or 62.5% of the scheme's 1.3 million members are now in the AMF default.

Yet at least 20% of members knowingly did nothing as they wanted to belong to the default, according to Fora.

Christina Schiller, head of communication the administator, said its survey suggests people were aware of the mandatory election and many made a active decision to pursue the default.

These stories were first published by Pensionsnyheterna, a Swedish-language specialist news service, and translated in agreement with IPE.com.

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