A stable, well-functioning financial market for allA stable, well-functioning financial market for allPensions being paid
Normal consumers may need some help in understanding how to calculate thesize of their retirement pension. Recently this has been easier to find out. On example is the development of the Minpension.se web page, which can give an idea of how much national pension and occupational pension based on collective bargaining, has been earned to date. However, private insurancebased pension saving and capital pension policies* are not included in the background data with which minpension.se works.
One particular problem is in explaining how pension amounts can change over time. One aim of this report is to describe the basic principles of how such changes are made for different types of pension. The last part of the report covers in more detail how bonuses are used to adjust pension amounts in private pension savings schemes.
The stock market falls of 2000, dropping interest rate levels and the increasing life expectancy of policyholders have had discernible effects for those with pension insurance policies under payment. Pension payments have been reduced, in some cases not just once. These reductions have been justified, but policyholders are often dissatisfied with the information provided by insurance undertakings regarding the background and consequence. This is clear from complaints' statistics in recent years. One particular problem is in explaining how bonuses can raise or lower pension amounts.
In the report we describe and review the basic principles followed by the insurance undertakings. We do not directly cover what should be considered appropriate information on bonuses in the report, but this is one of the issues that will be dealt with in a future review of Finansinspektionen's regulations and general guidelines (FFFS 2003:7) on information about life insurance policies and occupational pension schemes.
Author of the report: Björn Palmgren
*In practice there were no new policy subscriptions to capital pension policies from 2 February 2007. This is because the government in its submission 2006/07:47 to Parliament announced changes to taxation rules, including rules on the transfer of insurance-based savings, until further notice.
