26/04/2012 - Sweden should establish an independent committee of experts to oversee its National Pension Funds and set a clear, measurable financial objective for investments to ensure their long-term viability, according to a new OECD report.
The National Pension Funds are responsible for 12% of Sweden’s state pension liabilities, and manage assets of around SEK 895 billion. Over the next thirty years, payments are likely to significantly exceed contributions, and by 2040 the size of the funds (AP1 to 4 and 6) is expected to have fallen to SEK 400 billion.
The OECD Review of the Swedish National Pension Funds analyses the strengths and weaknesses of the system and recommends how both structure and management could be improved.
The investment mandate is to provide as high a return on investment as possible, while minimising risk. Each fund is free to set its own strategy and objective. The OECD says it would be more effective for all to have a single, clear target, so performance could be better measured. Parliament should be asked to approve this new mandate and take into account the impact of demographic changes on payouts.
Sweden should also:
Sweden’s National Pension Fund Inquiry commissioned the OECD report, which aims to contribute to the debate by comparing Sweden’s system with those of other countries and OECD guidelines.
For further information, journalists should contact Fiona Stewart of the OECD’s Financial Affairs Division (tel. + 33 1 45 24 14 52).