The management option within the premium pension
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
1 S requests approval of the committee's proposal and argues that there is great value in politically marking a greater sustainability responsibility for the Seventh AP Fund 1. 1 S emphasizes that the management shall be conducted in an exemplary manner where sustainable development is promoted without compromising the goal of secure pensions 1. 2 V considers that it is not enough to divest from companies within the coal industry, but that the AP funds must go further 2. 2 V suggests that environmental and ethical considerations should be equated with the goal of high returns 2. 3 V argues that investments in sustainable companies do not negatively affect the return 3. 4 SD considers the proposal to be reasonable and well-balanced 4. 4 SD emphasizes that the primary thing is that savers receive a good long-term return 4. 5 SD considers the proposal regarding the Seventh AP Fund to be reasonable and well-balanced as it promotes sustainable development without sacrificing the overall goal for the investment activities 5. 6 M stands behind the bill as it regulates the Seventh AP Fund and aims to offer a high-quality pension saving that provides a secure pension 6. 7 L stands behind the bill and the goal of exemplary fund management regarding sustainability 7. 8 L considers that it is not a good way to handle the pension savings 8.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Speakers (13)
Kalle Olsson (S)
Mr. Speaker! We are now debating the Social Insurance Committee's report on the Management Alternative within the premium pension. There, the regulation of the Seventh AP Fund and the management of the premium pension for those who have not themselves chosen funds for their premium pension, that is, the so-called management alternative, is addressed.
Sjunde AP-fonden is the largest actor within the premium pension system. At the end of 2021, the fund managed 970 billion, which is nearly two-thirds of the total assets in the system.
The proposals in the report mean, among other things, that the Seventh AP fund will have greater opportunities to invest funds in certain types of assets and that the goal for the Seventh AP fund's fund management will also in the future be the same as the goal for the premium pension system as a whole, that is, a high-quality saving that shall provide secure pensions.
Furthermore, a sustainability goal is also introduced for the Sjunde AP-fonden, which means that the management shall be conducted in what one might call an exemplary manner. Special weight shall be attached to how a sustainable development can be promoted without making concessions on the overall goal for the investment activities.
The management option within the premium pension
This new direction is completely in line with the changes that have been made previously in the investment rules of the First, Second, Third, Fourth and Sixth AP funds. For example, the First AP fund announced this year that they are divesting from companies with fossil activities because the management's assessment was that investments in the coal, oil and gas industry can entail higher financial risk and a negative climate risk exposure.
Overall, we have seen over time that the First-Fourth AP fund has significantly reduced its carbon footprint, and the fact that the pace of the reduction has increased after the new investment rules came into force shows that the new focus on sustainability work has yielded results.
The sharpened wording regarding exemplary management stems from the agreement that five parties in the Pensions Group entered into as early as 2017. The report is therefore based on a broad political consensus, which feels extra important to remind everyone of today when no one, least of all what it seems the government itself, really knows what will happen next regarding the pensions - after nearly three decades of close political cooperation on these.
Mr. Speaker! There is, of course, also a great value in that we now politically mark a greater sustainability responsibility even for the Seventh AP Fund. One may, however, ask what it is worth in light of the new climate-hostile path that the government has embarked upon.
Political leadership is crucial for us to manage the transition to a more socially and ecologically sustainable society. It cannot be ignored that the management of the AP funds or the business community at large hears the same thing as all of us do when the Finance Minister matter-of-factly states that if we do not meet the climate goals, then we do not. One wonders what the government's reaction will be in the event that the Seventh AP fund does not meet the sustainability goals. What will we face then? An indifferent shrug?
Mr. Speaker! There is an imminent risk that it will be we, the other parliamentary parties, who have to ensure that the sustainability goals we establish do not become more than just beautiful words on a piece of paper.
Ilona Szatmári Waldau (V)
Mr. Speaker! The Seventh AP Fund is, as stated, the state fund that invests the pension money for those who have not themselves chosen a fund in the premium pension system. Many refrain from choosing who should invest the pension money, perhaps because they do not want to keep track of funds themselves or because they simply do not like the premium pension system. Over the years, since the premium pension system was introduced, it means that those who have refrained from choosing a fund themselves have had their pension money in both coal and oil companies.
It is positive that the Seventh AP Fund is now working with sustainability by increasing exposure to green bonds and that it has divested companies judged to lack transition plans in line with the Paris Agreement, primarily within the coal industry.
But it is not enough to divest companies within the coal industry. The AP funds, Sjunde as well as the others, must go further. At the same time as the Sjunde AP fund divested these companies, more shares were purchased in certain blacklisted companies during 2021, according to a review that Sveriges Radio published in May this year.
Mr. Speaker! The majority of the Riksdag has previously established that the sustainability work for the First-Fourth AP funds is purposeful in relation to the funds' mandates. But the funds' mandates are not sufficiently clear when it comes to the sustainability work. This is noticeable, at least, in that the funds interpret the sustainability mandate so differently.
While some funds, for example, have sold their holdings in companies involved in the production of nuclear weapons, one chooses to retain such a holding, and some AP funds have divested their holdings in fossil activities while others have kept them. The seventh AP fund belongs to those funds that have not only retained holdings in fossil activities but have also increased them.
Several of the AP funds have invested in the company formerly known as Lundin Energy, where representatives of the company are charged with aiding and abetting crimes against international law.
The AP funds have invested in companies involved in fossil gas projects that are judged to have major consequences for the climate and the marine environment and which involve forced displacement of local populations. One AP fund has invested in a company that owns a coal mine and has been reported to the OECD for human rights abuses and environmental destruction.
By purchasing government bonds, the AP funds also lend money to several dictatorships.
The list of unethical investments can of course be made longer, but despite that, a parliamentary majority has established that the sustainability work is expedient.
The First-Fourth AP fund has the same guidelines but interprets them differently. One pair has, as I have previously mentioned, divested their holdings in, for example, companies within the fossil industry, while others retain their holdings in order to, as they say, be able to influence the companies, which among others the Seventh AP fund argues. One of the companies the Seventh AP fund has invested in is the Saudi state-owned oil company Saudi Aramco, which is the world's largest fossil company and also the company that has emitted the most carbon dioxide in history.
Regarding the case with Lundin Energy, in which the Seventh AP Fund increased its holding last year, it would be interesting to know in what way the AP funds that have or have had holdings influenced in connection with the crimes against international law. I have asked the question but have not received an answer.
Since the AP funds interpret the guidelines so differently, the guidelines should be clearer and tightened.
Another problem with the guidelines is that the goal of long-term high returns is paramount to the goal of sustainable investments. Even here, the funds seem to make different interpretations of which investments are both sustainable and provide long-term high returns, since some have divested holdings in, for example, fossil activities while others have retained them.
In September this year, that is about two months ago, representatives for Sjunde AP-fonden stated in a debate article that it is concerning that so many opinion leaders believe that sustainable investors should avoid companies that are deeply rooted in the fossil economy. It is by us as owners setting requirements that we can force changes, they claimed. Greenpeace rightly asked in a rebuttal how Sjunde AP-fonden, through its ownership in the Saudi state's oil company, can set requirements and achieve change.
I mean that tougher requirements must be imposed on all AP funds when it comes to environment and ethics. Investments in, for example, the Saudi state's oil companies should not be a possible option.
Mr. Speaker! In the Left Party's follow-up motion, we propose that environmental and ethical considerations shall be equated with the goal of high returns, that the fund shall not make any new investments in coal, oil, or fossil gas, that the fund shall divest existing holdings in the fossil industry within two years, that the fund shall have quantitative targets for investments in renewable energy, and that the fund shall not invest in companies that use tax havens to avoid taxation.
We have these proposals also when it comes to other AP funds. It is not enough to give the Seventh AP fund the same sustainability criteria as the other funds when we know that the companies interpret the criteria so differently.
There is no contradiction between making sustainable investments and achieving a high return. This has been shown by the funds that have divested from shares in fossil activities. Therefore, the goals should be equated and sustainability should not be subordinate to return.
Mr. Speaker! Reality shows that the regulatory framework for all AP funds needs to be tightened so that the Swedish people's pension investments work for a more sustainable world. I therefore move for approval of the reservation which gives the Seventh AP Fund clearer guidelines regarding sustainable investments.
The Swedish people's pension funds should be invested in sustainable development and not in fossil activities.
Daniel Persson (SD)
Mr. Speaker! For us Sweden Democrats, it is important that our pension system is robust and secure. The Seventh AP Fund shall offer cost-effective government investment options that contribute to savers receiving a good long-term return on their premium pension savings.
Let us look in the rearview mirror. When the general election approaches and the election campaign kicks off, questions about pensions usually surface. So did it in the latest election campaign. There was also a bit of a bidding war regarding the pension issue. In the end, the previous government got its proposal for the guarantee supplement through, but Moderates, Sverigedemokrater, Kristdemokrater, and Liberaler put forward a counter-proposal. It became a rather harsh debate and struggle over the issue.
Handling pension issues in that way risks breaking down the system's long-term stability. I am cautiously positive that Ulf Kristersson, in his government statement, provided an announcement that all parties will be invited to cross-bloc talks on pensions. Talks are good, but we Sverigedemokrater are disappointed that we have not been invited to the Pension Group yet.
The Pensions Group is, therefore, a parliamentary working group consisting of representatives from the parties that stand behind the 1994 pension agreement. Much has happened since then. The Pensions Group is still a rather old construction, so it should be time for a rethink and for all parties to be included in the group. My hope is, nevertheless, that we will be reasonably in agreement on the pensions with paths forward that hold over time and that we will avoid the bidding from the election campaign. There are other issues that we parties can occasionally dispute. So I feel a certain optimism for the Pensions Group's future and the handling of the pensions from now on.
There are furthermore several positive elements in the Tidö Agreement that will affect pensions, for example, reduced tax on pension income. Proposals shall be developed on how pensioners' finances can be strengthened and how freedom of choice can be protected.
The premium pension is the basis of a social insurance whose purpose is to provide economic security during old age. Earned money is placed in funds. The premium pension is a part of the public pension system. Even for those who have not made an active choice for their premium pension, whose savings are managed by the Seventh AP fund, the savings shall be characterized by high quality that provides a secure pension. The Seventh AP fund has the sole task of managing premium pension funds for the Swedish people.
Regarding the new goal, it is clearer that the premium pension system shall offer a high-quality pension savings that provides a secure pension. The management shall be carried out in the savers' interest. The pension savings' invested funds shall provide a return that is clearly higher than the change in the income index but without providing guarantees for the return. In the future, the return target shall have a reduced significance in favor of predictable and stable payments over time, which will become a security for the pension savers.
Regarding the proposal on management, the Seventh AP Fund shall attach special importance to how sustainable development can be promoted through responsible investments and responsible ownership without compromising the overall goal of the investment activities. The primary objective is that savers receive a good long-term return on their premium pension savings. The proposal is reasonable and well-balanced, and it should not be more detailed in its design. Furthermore, the Seventh AP Fund's climate action plan specifies how the fund shall live up to the Paris Agreement.
The goal of exemplary management means that at least as high requirements are placed on the Sjunde AP-fonden as on other funds on the fund market. These are already tough requirements being placed on the market, and it is good that the Sjunde AP-fonden does not receive stricter requirements regarding exemplary management in terms of sustainability so that the rules of the game remain the same.
Overall, the socio-economic effects and the effects for the pension savers will be positive because the conditions for good pension outcomes within the management option are improved. Furthermore, the effects for a sustainable development will be positive.
The committee's proposal is not expected to have any direct public finance effects. Once again, I move for approval of the committee's proposal.
Kalle Olsson (S)
Mr. Speaker! It was only a few weeks ago that a Sweden Democrat in this chamber, in this speaker's chair, argued with emphasis that Sweden should invest in coal power plants in poor countries. It would be part of the solution to the climate challenge.
My simple question to Daniel Persson is whether it is a good idea. Should we take parts of the Sjunde AP-fondens 970 billion and make those types of investments? Would it be a wise climate policy?
Daniel Persson (SD)
Mr. Speaker! I thank the member for the question.
I think this proposal is well-balanced regarding the goals for sustainability and the overall goal for placement activities. These are the ones we should base it on.
The pension savings' invested funds shall provide a return that is clearly higher than changes in the income index. They shall provide predictable and stable payments over time. This is important, and we stand behind this.
It is therefore important to have stable payments over time. It is important for us Sverigedemokrater, and it is important in particular for our pensioners.
Kalle Olsson (S)
Mr. Speaker! I do not perceive that Daniel Persson is answering my question.
Does Daniel Persson share the view that it can be wise climate policy to take our pension savers' funds and invest them, for example, in coal power plants in poor countries or in other fossil activities in other countries? Does it rhyme with the sustainability goals that we are discussing today?
Daniel Persson (SD)
Mr. Speaker! In the proposal on how the management shall be conducted, the Sjunde AP-fonden shall attach special importance to how sustainable development can be promoted through its investments and ownership without compromising the overall goal of the investment activities.
It is a reasonable and well-balanced proposal. As I pointed out in my speech, it appears in the Seventh AP-fund's climate action plan how it shall live up to the Paris Agreement.
Ulrika Heindorff (M)
Mr. Speaker! Today we are debating the management option within the premium pension. It concerns three changes in the area, namely in the Social Insurance Code, in general pension funds, and in the Act on the Sixth AP Fund.
The changes being made involve a regulation of the Seventh AP Fund and management for those individuals who have not themselves made a choice in their premium pension. The Moderates support the bill.
The premium pension is a part of the general pension. Every year, 2.5 percent of one's pension-qualifying income and other taxable benefits are allocated to the premium pension, which I will henceforth refer to as ppm. One chooses for oneself whether to place the money through fund choices or whether to let the money remain in the state management option.
Now a few words about the objective and design of the premium pension system. The new objective for ppm entered into force in June this year. The background to this is the pension agreement that was made in 2017. Sometimes it takes a little time in politics. According to the new objective, the premium pension system shall offer a high-quality pension savings that provides a secure pension.
The management option can be said to be designed as a consolidated product where the investment risk is clearly adjusted over time according to the person's age. At 56 years of age, one gradually receives a larger share of interest in the portfolio.
As I mentioned initially, the Seventh AP-fund manages ppm for those individuals who have not themselves chosen funds for their ppm. The changes proposed in the bill concern greater opportunities to invest funds in certain types of assets.
Mr. Speaker! In the Tidö Agreement entered into between the coalition parties, there is a provision regarding household economy where it is established that proposals shall be developed on how pensioners' finances can be strengthened and freedom of choice protected. After having spent four years within the Social Affairs Committee and worked almost exclusively with seniors' issues, I see that precisely the freedom of choice for the elderly needs to be protected in many areas – within care but also within economy. Through the decision we make today, the goal of strengthened finances will hopefully be fulfilled. We will return later with more proposals that also protect freedom of choice.
Since the Moderate-led government took office, we have had an older minister, which I think is very positive. It was something that my party leader and now also our Prime Minister promised during the election campaign and which became a reality after the election. The older minister is also responsible for the social insurances. The minister has stated that it is important to secure the finances for those who have worked a whole working life, and the design of ppm is part of securing the finances.
Mr. Speaker! Sweden has a fundamentally stable and well-functioning pension system. But as we live longer and longer, the pension system needs to be adjusted so that pensions do not decrease. For the Moderates, it is absolutely crucial that if one has worked a full working life and been part of building Sweden, one should feel that it has paid off.
Since the question of pensions and the pension system is long-term, the basic principles for the pension system must also be stable and hold over time. The pension shall suffice for a secure life as a retiree, and it shall be possible to increase one's pension through diligence and savings.
It is good, Mr. Speaker, that there is a broad majority behind the decision that we will make here today regarding the management option within ppm. The Moderates welcome a broad consensus on these important and long-term issues. This is the first debate on pensions this mandate period, but I am completely convinced that it is not the last. Hopefully, these important decisions on pensions can also in the future be made by a broad majority in the Riksdag.
Mauricio Rojas (L)
Mr. Speaker! Proposition 2021/22:280 on the choice of investment options within the premium pension, which Pensionsgruppen has supported, should, in my opinion, be approved by the Riksdag.
We Liberals fully support the government's proposal that the management option within the premium pension shall constitute a high-quality pension saving that provides a secure pension.
We also support that a goal of exemplary fund management in terms of sustainability is introduced for the Seventh AP fund.
At the same time, it is our firm opinion that the Riksdag should reject the Left Party's committee motion 2022/23:22, which the Green Party has also supported.
Mr. Speaker! I will devote the rest of my speech to explaining why this motion should be rejected. It concerns important principled considerations that are worth highlighting with some care.
The motion effectively stands for a way of viewing the relationship between citizens and politicians where politicians are given increasing power to decide over the citizens' lives and resources. It well reflects the Left Party's history, ideological heritage, and general direction, where the scope and authority of politics are in practice seen as unlimited.
At the same time, I must admit that it surprises me somewhat that the Green Party can stand behind such a view, the unfree consequences of which we have been able to witness wherever it has prevailed.
It is important, Mr. Speaker, to note in this context that the follow-up motion we are discussing today is based on and in all respects repeats what is stated in a longer and more argumentative committee motion from Vänsterpartiet regarding the AP funds - motion 2021/22:463. This motion on the AP funds helps us better understand both the actual purpose and the ideological perspective behind both motions.
In the motion, it is stated plainly that the AP funds should be used "as part of a strategic industrial policy." It is precisely in order to be able to realize the vision of such a strategic industrial policy that the Left Party wants to equate other goals with the return target that has so far been the funds' governing principle.
In this context, there is an important clarification to be made. If the different equal goals were to collide with one another, the Left Party's committee motion on the AP funds is clear in stating that it is the return target that should be sacrificed. In other words, the different goals are equal as long as they do not collide or come into conflict with one another. Or, to put it with a paraphrase of George Orwell's famous formulation in the satirical novel Animal Farm: All goals are equal, but some are more equal than others.
Mr. Speaker! In the motion we are discussing today, the other goals to be equated with the return goal are referred to as "environmental and ethical considerations." But behind this seemingly quite summary and innocent description is hidden, as has already been pointed out, a much more extensive view of how the funds' assets should be used.
In this regard, the already cited committee motion on the AP funds is clarifying. There, it is stated that the funds' resources shall be used based on "long-term, socio-economic criteria" which entail "a long-term ownership responsibility in order to maintain high employment and sustainable growth."
Therefore, Vänsterpartiet proposes, among other things, that the First AP Fund shall be "converted into a fund for socially beneficial investments". In other words, the pension funds shall be converted into a tool to achieve politically defined goals regarding, for example, employment and something as imprecise as "socially beneficial investments". All of this within the framework of the already referred strategic industrial policy that Vänsterpartiet intends to implement in the long run.
This is, Mr. Speaker, nothing other than the path of central planning.
Ultimately, it is about guidelines that in fact pay no attention whatsoever to the return target and not even to the preservation of the value of the citizens' pension savings and future pensions. This is how Vänsterpartiet and Miljöpartiet view the assets that belong to the citizens and are intended to ensure that the state can meet its commitment to the population. Here, it is the realization of their own political agenda that shall guide, regardless of the consequences for the pensioners.
Mr. Speaker! Pension savings must not be transformed into an arena where the parties on the left try to realize their outdated dreams and utopias of a planned economy. Therefore, the Riksdag should reject what is stated in the Left Party's committee motion on the management option within the premium pension.
In summary, Mr. Speaker: I vote in favor of the committee's proposal, and I move for the rejection of the reservation.
Ilona Szatmári Waldau (V)
Mr. Speaker! I actually do not quite know where to begin in this reply. Should I start with the member taking a proposal we have regarding a fund and applying it to the entire AP fund system?
Or should I start with that he does not think it is particularly good to also look at this from a strategic business policy perspective? We have a proposal that a fund should be restructured so that one can support new, unlisted companies.
Or should I perhaps start by saying that the member seems to be completely uninterested in the funds investing sustainably? The member therefore thinks it is completely natural and good that the Seventh AP fund has invested in the Saudi state-owned oil company Saudi Aramco. Saudi Arabia is perhaps not the most democratic country, and their oil company is probably not the most democratically governed either. And it is, as mentioned, the company through history that emits the most carbon dioxide. A coal mine has been reported to the OECD for human rights abuses and environmental destruction. The local population is forcibly displaced. There will be major consequences for the marine environment. That we turn against all of this, which the AP funds invest in today, Mauricio Rojas is trying to get some type of harmful socialism.
This world is going under. We have a climate to take care of. In that case, our pension money needs to work for a good climate, and it does not affect the return. That is what the funds that have divested from fossil holdings have shown.
Mauricio Rojas (L)
Mr. Speaker! I cannot help the member to decide where she should begin or what she should develop; unfortunately, I cannot say much about that.
What is important here is that we should not use pension savings for these types of political purposes, such as employment or other unspecified goals, as the Left Party wants to do. This is also completely in line with the Left Party's ideological history. It is planned economy, and it is the politicians and the state who should decide. I do not think so.
I have, however, not said that I am in favor of investments in appalling companies and so on, as the member mentions. That is why we fully support that there should be an exemplary management of the fund, which obviously shall take the environmental goals into account.
But in the Left Party's committee motion, it says, for example: "The fund shall divest existing holdings in the fossil industry." This is to take place within two years. Here, Mr. Speaker, nothing is said about taking market conditions into account. In every serious proposal on this, it is said that one should look at how things are going on the market so that one does not lose money. Here, there are no such specifications.
I would very much like the member to explain why you do not care about the value of pension savings when you propose such things.
Ilona Szatmári Waldau (V)
Mr. Speaker! I will begin with the final question. I have said this several times. I said it in my speech, and I have said it in the exchange of remarks. Two of the AP funds have divested all holdings in fossil companies. They perceive that this is also part of achieving the best return.
Above all, two companies - Sjunde AP-fonden is one of them - argue that by investing in fossil energy we influence the companies. They have not been able to answer how they positively influence Saudi state-owned oil companies when it comes to fossil investments.
So there is no contradiction. I can say it as many times as I want from the rostrum. There is no contradiction between a good return and making investments that are not climate-damaging.
It is also somewhat interesting that Member Rojas says that the Left Party wants a planned economy. Here I stand and say that one should invest in good companies. How can the Member mean that it is a planned economy when the Left Party puts forward proposals on which shares one should buy? A planned economy should probably be to abolish share trading?
I believe that Member Rojas in this post is completely out of touch. His purpose is only to attack Vänsterpartiet, without actually having any knowledge whatsoever regarding this matter and our views on it and when it comes to the AP funds.
Mauricio Rojas (L)
Mr. Speaker! Investing in good companies is very important. Planned economies have never done that. That is why all planned economies have collapsed.
As you, Ilona Szatmári Waldau, Mr. Speaker, and we all very well know, the planned economic thinking that you actually represent says that it is the politicians who should set goals for the companies, say that we should divest 20 percent and invest in one or the other. It has not turned out to be the path to success. The path to success is free entrepreneurship - the people out in society who choose freely. We only provide the frameworks so that they can act freely in a market.
You do not openly call this path planned economy today – it is clear that everyone would laugh at you if you did. But what you say about strategic industrial policy and a lot of different goals that are to be equated with the profit goal is another way of talking about planned economy.
It is clear that there can be contradictions. Everyone knows that if there are different goals, they can collide with each other. You state clearly in the motion in question, but above all in the one regarding the AP funds, that the return target shall in that case be abandoned to make room for others. That is actually how you are thinking.
I do not know if you remember the motion you presented here not so long ago, where it states that it is the strategic industrial policy that should be the most important and that we will see what happens with the return target. I do not believe that this is a good way to handle the pension savings.
The deliberation was hereby concluded.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.