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Johan Sjostrom

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  1. Johan Sjostrom Marketing Director, KPA PENSION (SWEDEN) Friday, 27.9.2013

  2. First and Second Pillar Pensions in Sweden Conference on Pensions, September 2013, Hydra Ev datum

  3. The Swedish pension system • State pension (I pillar): • Based on income • 18.5% on ones’ income is set aside • Income pension (16 percentage points) • Pay-as-you-go, notional defined contribution • Premium pension (2.5 percentage points), individual choice of funds • Guaranteed pension (minimum level) • 46 430 EUR (2013) is the ceiling for accruing pensions rights • Occupational pension (II pillar): • Nation-wide collectively negotiated agreements • Covering appr. 90 % of the workforce • Paid by employer, DC, individual choice

  4. Pension reform process - very long 1994 Parliament adopts principles of the new pension plan 1998 Main legislation of the new pension plan 2001 Legislation on the automatic balance mechanism 1992 Draft of a new pension plan 1991 Commission set up 2003 1990 1991 1994 1998 2001 2003 first payments according to new system Social democratic government Social democratic government Center-right government But transition quick i international comparison

  5. Swedish “pension market”, payments “Market share” Percent of GDP 10.3 Private 10% 1.0 9.3 Occupa- tional Local & regional govern. empl. Civil servants 1.5 15% Private blue color Private white color 7.8 ATP “old” old-age pensionplan Inkomstpension (new) Premium pension (new) Public 75% 6.2 1.6 Survivors pen. 0.6 1.0 1.0 Guaranteed pen. 0.0

  6. Second pillar - four main collective agreements Private sector employees Public sector employees White collar 750 000 State 215 000 Municipals and Regions 1 100 000 Blue collar 1 200 000

  7. Second pillar pensions – contributions/repl.rates

  8. Swedish market – second pillar pensions

  9. Market volumes, life insurance

  10. Where can Mr Svensson invest his second pillar pension?

  11. What’s the status of my pension?

  12. The orange envelope • Started in 1999 • Distributed each year to citizens born in 1938 and later • Pensionable income > 1 843 EUR • Distribution: • January to March • 6,2 Million envelopes each year (population 9,3 Million)

  13. Projections made in the orange envelope

  14. Does Mr Svensson read his orange envelope?

  15. Does Mr Svensson understand the orange envelope?

  16. www.minpension.se • Implemented in 2004 • 1,8 million users (2012) • A joint initiative by the State and the Insurance Industry • I, II and III pillar pensions • A tool for individual forecasts

  17. Pension forecasts from different sources Orange envelope Green envelope My pension www.minpension.se Forecasts on-demand I, II and III pillar Yearly statement & projections I pillar Yearly statement & projections II pillar

  18. Initiatives in the near future • Increasing minimum pension age • Currently at 61 year in first pillar • Currently at 55 year (DC) and 61 year (DB) in second pillar • Premium Pension in first pillar? • Funded or not funded? • Number of funds? • Tax incentives for third pillar pensions? • To be or not to be? • Financial literacy • How can Mr Svensson be more financial literate?

  19. Thank you for your attention! johan.sjostrom@kpa.se www.kpa.se

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