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Review of the Swedish National Pension Funds

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  • Clara Severinson
  • Fiona Stewart
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    Abstract

    This paper provides a review of the Swedish National Pension Funds based on international good practice and OECD guidelines. The paper focuses mainly on the general size and structure of the funds, the investment framework and the governance of the funds. The internal management of the funds appears to be strong, with governance and risk management structures in place that appear to broadly follow OECD guidelines. The report concludes that the AP funds could benefit from having one clear and specific long-term investment objective, set by an independent committee answerable to Parliament, for all the AP funds against which their long-term performance can objectively be measured. The mandate and role of the AP6 fund could also be clarified. The report recommends the implementation of the prudent person rule as restrictive investment regulations are leaving the AP funds with less room to adopt varying investment strategies, and thus takes away some of the potential benefits of competition and diversification from having four different funds. Finally the selection process for the Governing Boards of the funds could be made more transparent and rigorous. Examen des fonds nationaux de pension en Suède On trouvera dans cette note un examen des fonds nationaux de pension en Suede fonde sur les bonnes pratiques menees dans les differents pays et les Lignes directrices de l.OCDE. La note met principalement l.accent sur le montant observe en general et sur la structure des fonds, le cadre des investissements et la gouvernance des fonds. La gestion interne des fonds apparait saine, et il semble que les structures de gouvernance et de gestion du risque qui sont applicables soient conformes dans l.ensemble aux Lignes directrices de l.OCDE. L.etude conclut que les fonds AP gagneraient a se fixer un objectif a long terme d.investissement clair et specifique, determine par une commission independante responsable devant le Parlement, pour tous les fonds AP par rapport auxquels leurs performances a long terme peut etre objectivement mesurees. Le mandat et le role du fonds AP6 pourraient egalement etre clarifies. Cette etude recommande l.application de la regle de prudence, dans la mesure ou des reglementations restrictives en matiere d.investissement laissent peu de marge de manoeuvre aux fonds AP pour faire varier leurs strategies d.investissement et les privent donc des avantages potentiels de la concurrence et de la diversification qui resultent de l.existence de quatre fonds differents. Enfin, le processus de selection des membres des comites directeurs des fonds pourrait etre rendu plus transparent et plus rigoureux.

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    File URL: http://dx.doi.org/10.1787/5k990qtkk6f8-en
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    Bibliographic Info

    Paper provided by OECD Publishing in its series OECD Working Papers on Finance, Insurance and Private Pensions with number 17.

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    Date of creation: 04 May 2012
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    Handle: RePEc:oec:dafaad:17-en

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    Keywords: pension fund; AP Funds; investment framework; governance; public pensions; reserve funds; Swedish National Pension Funds; fonds nationaux de pension suédois; fonds AP; cadre d’investissement; pensions publiques; fonds de réserve; fonds de pension; gouvernance;

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