1. The Swedish Premium Pension Plan
Eurostat Pension Workshop
Michael Wolf National Accounts Department

2. Outline of the presentation
Short history of the Swedish National Pension System
The Premium Pension Plan
Recording in the core national accounts
Presentation in table 29
Outstanding issues

3. History Pension reform commission launched in 1984
Alternatives for a new pension system presented 1990
Political disagreement on the Premium Pensions
Parliament decided in 1994 and funding starts from income year 1995
The Premium Pensions Agency (PPM), was created in 1998 (notional unit from 2010)
The first transition period ended in 2001 when individuals could make their own choice of funds
In 2004 Eurostat decides that PPM should be a financial corporation outside government
In 2010 The Swedish Pensions Agency take over responsibility from PPM
Lately discussion have focused on the existence of the Premium Pension Plan

4. Liabilities in the Swedish national pension system
Value of pension liabilities in millions of Swedish krona

5. How the Premium Pension Plan works
Defined contributions pension plan
Contributions
Approx. 2.5% of wages and salaries
Central government pays contributions for persons on maternity leave, in military service etc.
Temporary funding by SPA (transition period)
Inheritance bonus
Individual funding outside the government sector after final tax settlement
Service charge (≈0.4 percent)
SPA administrate all payments in the plan and charges ≈0.1 percent of fund value on each individual account
SPA negotiate the service charge with the fund managers down from ≈ 0.9 to ≈ 0.3 percent (scale advantage)
Benefits
It is possible to receive benefits from age 61
The value of fund shares is divided by an annuity divisor

6. From contributions to pension benefits
Transitional period,
contributions in year t
Funding period,
contributions in year t
Continued funding or
conversion into an annuity
time
January
year t
December
year t+1
Retirement
Who decides on the funding strategy?
Households or
SPA (annuity)
SPA
Households
Who decides on investment options?
Government
Government
Government
SPA=Swedish Pension Agency (a central government unit)

7. SPA annual report, note 34

8. (Swedish Social Insurance Agency) Social security funds (SPA)
The difference in recording between actual payment and national accounting (rerouting) of compulsory contributions to the Premium Pension Plan
Central government
(Swedish Social Insurance Agency)
Employers (corps.), other organisations incl. Govt.
STÅP
Compensation of
employees
Social security funds (SPA)
To temporary
management
Households
Transfer of
the liability
Investment funds, fund managers
Notional unit, PPM
Actual payment
Rerouting

9. (Swedish Social Insurance Agency) Social security funds (SPA)
The difference in recording between actual payment and national accounting (rerouting) of benefits.
Central government
(Swedish Social Insurance Agency)
Households
(claim)
Social security funds (SPA)
Investment funds, fund managers
Actual payment
notional unit, PPM (debt)
Rerouting

11. Some outstanding issues
Can a single pension plan have more than one manager?
Should a single pension plan only be recorded in one column or can it be present in several columns?
How far should we go in splitting institutional units in order to record different parts in separate columns?
How should transfers between different managers of the same plan be recorded?

12. Thanks for your attention!