The Market for Retirement Products in Sweden

Far-reaching changes in the regulation of financial markets and the organization of public pensions in the 1980s and 1990s transformed the landscape for retirement products in Sweden. First, banking and insurance were extensively deregulated in the 1980s, while the securities markets experienced major expansion. Insurance received a large boost from the authorization of unit-linked products in the early 1990s. Second, the public pension system was reformed. Survivor benefits for widows were eliminated from the public pillar in the late 1980s, leading to a large increase in demand for term life insurance. The old defined benefit public pension system was replaced by a notional or nonfinancial defined contribution (NDC) scheme, while a funded defined contribution (FDC) component was also created in the public pillar. The four occupational pension funds that cover the majority of Swedish workers were also converted into FDC schemes. This paper reviews the implications of these changes for the Swedish annuity market. It discusses the regulation of payout options in Sweden, highlighting the compulsory use of life annuities in the public pillar and the preference for term annuities in the occupational funds. It examines the performance of providers of retirement products, including the PPM, and reviews the increasing focus on risk-based regulation and supervision. The paper also emphasizes Sweden's success in moving in the direction of increased funding and privatization of old age insurance, while maintaining its basic character as a highly developed welfare state.

Bibliographic Details

Main Author:	Palmer, Edward
Language:	English
Published:	World Bank, Washington, DC 2008-10
Subjects:	ADDITIONAL CONTRIBUTIONS, ADMINISTRATIVE FEE, AGE OF RETIREMENT, ANNUITY VALUES, AVERAGE BENEFIT, AVERAGE PENSION, AVERAGE WAGE, BANK DEPOSITS, BANKS, BASIS POINTS, BENEFICIARIES, BENEFIT PLANS, BEQUEST, BEQUESTS, BOND, BOND PORTFOLIO, BOND RATE, BONDS, BORROWING, BROKER, CALCULATION, CALCULATIONS, CENTRAL BANK, CLAIMANTS, CONSERVATIVE INVESTMENT, CONTRACTUAL SAVING, CONTRIBUTION, CONTRIBUTION RATE, CONTRIBUTION SCHEMES, CONTRIBUTIONS, CREDITS, CURRENCY, DEBT, DEFINED CONTRIBUTION PENSION, DEPOSIT, DEPOSITS, DERIVATIVES, DISABILITY, DISABILITY INSURANCE, DISPOSABLE INCOME, EARLIER RETIREMENT, EARLY RETIREMENT, EMPLOYER CONTRIBUTION, EMPLOYER CONTRIBUTIONS, EQUITIES, EQUITY FUND, EQUITY FUNDS, EQUITY MARKET, EQUITY PORTFOLIO, EXCHANGE RATE, FACE VALUE, FINAL EARNINGS, FINANCIAL DATA, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL LIBERALIZATION, FINANCIAL MARKET, FINANCIAL MARKETS, FINANCIAL POLICY, FINANCIAL PORTFOLIO, FINANCIAL RISKS, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FUND MANAGER, FUND MANAGERS, FUTURE GROWTH, GOVERNMENT BOND, GOVERNMENT BONDS, GOVERNMENT BUDGET, HEALTH INSURANCE, HOLDING, HOLDINGS, INCOME, INCOME REPLACEMENT, INCOME REPLACEMENT RATES, INCOME TAX, INCOME-TAX, INDIVIDUAL ACCOUNTS, INDIVIDUAL PENSION, INDIVIDUAL PENSIONS, INDIVIDUAL RETIREMENT, INDIVIDUAL RETIREMENT ACCOUNTS, INDIVIDUAL SAVING, INHERITANCE, INSTITUTIONAL DEVELOPMENTS, INSURANCE, INSURANCE COMPANY, INSURANCE MARKET, INSURANCE POLICIES, INSURANCE PREMIUMS, INSURANCE PRODUCT, INSURANCE PRODUCTS, INTEREST RATES, INTERNAL RATE OF RETURN, INTERNATIONAL BANK, INTERNATIONAL STANDARDS, INVESTING, INVESTMENT CHOICES, INVESTMENT DECISIONS, INVESTMENT FUNDS, INVESTMENT POLICIES, INVESTMENT PORTFOLIO, INVESTMENT RETURNS, LABOR FORCE, LABOR MARKET, LEVY, LIFE EXPECTANCY, LIFE INSURANCE, LIFE INSURANCE COMPANIES, LIFE INSURANCE COMPANY, LIFE INSURERS, LIFETIME, LIQUID ASSETS, LOAN, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, LOW INCOME, LUMP SUM, LUMP SUMS, MANDATORY CONTRIBUTIONS, MARKET SHARE, MARKET SUPERVISION, MARKET VALUE, MARKETING, MARRIED COUPLES, MARRIED WOMEN, MATURITY, MINIMUM PENSION, MUTUAL FUNDS, NATIONAL DEBT, NATIONAL DEBT OFFICE, NET ASSETS, NEW JOBS, OCCUPATIONAL FUNDS, OCCUPATIONAL PENSION, OCCUPATIONAL PENSION SCHEMES, OCCUPATIONAL PENSIONS, OCCUPATIONAL PLANS, OCCUPATIONAL SCHEME, OCCUPATIONAL SCHEMES, OLD-AGE PENSION, PENSION AGE, PENSION BENEFITS, PENSION FUND, PENSION FUNDS, PENSION INCOME, PENSION LITERATURE, PENSION PLANS, PENSION PROVISION, PENSION REFORM, PENSION REFORMS, PENSION RIGHTS, PENSION SAVING, PENSION SCHEME, PENSION STATEMENT, PENSION SYSTEM, PENSION SYSTEMS, PENSIONERS, PERSONAL SAVING, PORTFOLIO CHOICE, PORTFOLIO CHOICES, PORTFOLIO REGULATIONS, PORTFOLIOS, PREMIUM PAYMENTS, PRICE INDEXATION, PRIVATE FUND, PRIVATE FUNDS, PRIVATE PENSION, PRIVATE SAVING, PROBABILITY, PUBLIC EXPENDITURES, PUBLIC PENSION, PUBLIC PENSIONS, PUBLIC SAVING, PURCHASES, PURCHASING POWER, RATE OF GROWTH, RATE OF INFLATION, RATE OF RETURN, RATES OF RETURN, REPLACEMENT RATE, REPLACEMENT RATES, RESERVES, RETIREMENT, RETIREMENT AGE, RETIREMENT AGES, RETIREMENT BENEFIT, RETIREMENT INCOME, RETIREMENT PRODUCT, RETIREMENT PRODUCTS, RETIREMENT SAVING, RISK CAPITAL, RISK MANAGEMENT, SAFETY NET, SALARY, SALES, SAVER, SAVERS, SECURITIES, SECURITIES MARKETS, SELF-EMPLOYMENT, SEVERANCE PAY, SOCIAL INSURANCE, SOCIAL SECURITY, SOCIAL SERVICES, SOLE PROVIDER, SOLVENCY, SOURCES OF INCOME, STOCK MARKET, STOCK MARKETS, SUMMARY OF CHANGES, SUPERVISORY AGENCY, SUPERVISORY AUTHORITY, TAX CODE, TAX DEDUCTION, TAX LAW, TAX SYSTEM, TELECOMMUNICATIONS, TOTAL COSTS, TRADING, TRANSACTION, UNEMPLOYMENT, VALUE OF ASSETS, VARIABLE RATE, WAGE, WAGES, WELFARE STATE, WHITE-COLLAR WORKERS, WITHDRAWAL, WORKING AGE, WORKING AGE POPULATION, WORLD MARKET, WORTH, YOUNGER COHORTS,
Online Access:	http://documents.worldbank.org/curated/en/2008/10/9912072/market-retirement-products-sweden https://hdl.handle.net/10986/6935
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