Shock revelation for Swedish pension savers
Swedish pension savers were shocked to hear on Thursday that the Sjunde AP-Fonden, has lost around 20 billion kronor (3 billion dollars), some 20 per cent of its value in the past two months.
The fund, which is the default for pension savers who do not actively place their own money, is under pressure for political reasons to take high risks on pension savings, which has brought widespread criticism from savers and experts alike.
Niklas Lundberg who is responsible for analysing the performance of fund managers, told Sveriges Radio, “What is remarkable here is that it is the small savers, those who probably have less knowledge of such things, who have ended up with high risk funds.”
The fund started its higher risk strategy last May, using new means supposedly capable of improving performance by 50%. For every 100 kronor it takes from savers, it buys shares for 150 kronor, providing a clear risk of overexposure.
Another expert, Aktiespararna’s general manager Gunther Mårder, also voiced his concerns over Sjunde AP-Fonden, adding that he was not surprised to hear things have gone badly in recent months, because the fund managers have become over-exposed to risk by borrowing too heavily.
Meanwhile AP-Fonden general manager Richard Gröttheim hit back at the jibes, saying that the company clearly warns savers of the risks involved, but without taking such risks, the potential to grow their pensions becomes that much smaller.
“You can never guarantee that losses will not occur,” he added.
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The fund, which is the default for pension savers who do not actively place their own money, is under pressure for political reasons to take high risks on pension savings, which has brought widespread criticism from savers and experts alike.
Niklas Lundberg who is responsible for analysing the performance of fund managers, told Sveriges Radio, “What is remarkable here is that it is the small savers, those who probably have less knowledge of such things, who have ended up with high risk funds.”
The fund started its higher risk strategy last May, using new means supposedly capable of improving performance by 50%. For every 100 kronor it takes from savers, it buys shares for 150 kronor, providing a clear risk of overexposure.
Another expert, Aktiespararna’s general manager Gunther Mårder, also voiced his concerns over Sjunde AP-Fonden, adding that he was not surprised to hear things have gone badly in recent months, because the fund managers have become over-exposed to risk by borrowing too heavily.
Meanwhile AP-Fonden general manager Richard Gröttheim hit back at the jibes, saying that the company clearly warns savers of the risks involved, but without taking such risks, the potential to grow their pensions becomes that much smaller.
“You can never guarantee that losses will not occur,” he added.
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