Investors benefit from Swedish life insurance report, says Skandia
The handover of a report to Swedish Financial Markets minister Peter Norman into the rights of those investing and saving through the domestic life insurance industry has been welcomed by Skandia.
The report has brought forward ideas to make it easier for long term savers and investors to have greater say in how their capital can be moved around, especially where it is linked to life insurance contracts used to provide workplace pensions.
Skandia particularly welcomed proposals that would make it easier for those who are members of collective bargaining (unions) to be able to make more individual choices about where their investments are made.
Bengt-Åke Fagerman, CEO of the Skandia group, said: “Today, workplace pensions in the world of collective bargaining work as if you pay for a stereo, but the union and employer pick the play list. And if you don’t make any active choices, then their song will play, which they get royalties for, repeatedly. But we know that certain customers like ballads, others hard rock, and that they want to make their own choices. Today’s proposals are an important step forward, as savers get much greater power over their own play list and who manages their workplace pension. But, as a customer owned company we hope for even more in future.”
Skandia said it was not criticising the existing Swedish model, where the different partners in the labour market have agreed a reasonable level of savings. But it said that it was important to increase flexibility, for example, to enable savers to move their investments post-retirement or when changing jobs, given that it is the investor who takes the risk.
“We don’t understand the collective bargaining partners’ resistance to greater consumer power over workplace pensions. They suggest that it would be too difficult and above all that they are concerned investors would make poor choices. As a company that is becoming fully customer owned we believe that the solution to such problems cannot reasonably be to limit people’s choices, but rather together solve the practical problems and shoulder the burden of helping people make good decisions based on their personal circumstances,” Fagerman said.
Skandia’s stance comes in stark contrast to the opinion put forward jointly by the chairs of the Saco, TCO and LO unions in Sweden’s Dagens Nyheter earlier this month.
Göran Arrius, Eva Nordmark, and Karl-Petter Thorwaldsson said that the report posed a “risk of hollowing out the entire workplace pension system if the proposals are pushed through.”
Norman (pictured) on receiving the report said: “It is important to create a modern, responsible and in the long term sustainable regulatory regime for the life insurance market, where the focus should be on ensuring safe pensions.”
The full report (SOU 2012:64) into Sweden’s life insurance sector also considered questions about how to better guard the broader interests of insured persons. The report will now be put out for further consultation and comment from interested parties.
Click here to view report author Tord Gransbo discuss the conclusions (in Swedish):