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Pension fund favours banks not savers

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Pension fund favours banks not savers
15:41 CET+01:00
Sweden's banks are the only winners from the Premium Pension Authority (PPM) fund system. Despite plunging portfolio values fund managers have managed to pull in billions of kronor from the scheme.

Fund management firms have earned more than eight billion kronor ($980 million) from the PPM system which was launched in 2000.

Savers have however in contrast lost a total of 33 billion kronor from the PPM system which is the upper tier of the Swedish state pension system with a fixed contribution level collected via the tax system.

The "orange envelope" annual statements have been dropping through the letter-boxes of Swedish households in recent weeks and have made discouraging reading for those hoping to see steady growth in their pension pot.

Pensions savings have declined on average by 0.8 percent per annum since the first payments were set aside for the scheme in 1995.

In comparison with the general state pension scheme, in which the money would have otherwise been placed, which has returned 3.5 percent per annum.

In total Swedes have pumped in 264 billion into the system. The value at the end of 2008 amounted to 231 billion kronor, a decline of 33 billion kronor.

The explanation behind the dramatic fall in value is evidently the massive stock market crash that has occurred over the past year. The development is compounded by the timing of the launch of the system, in 2000, when the last broad downturn in stock market values occurred.

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