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Union leader in hot seat over AMF Pension row

The head of Sweden’s main trade union group is facing a storm of media criticism following revelations that she approved a lavish pension package for former AMF Pension CEO Christer Elmehagen.

Union leader in hot seat over AMF Pension row

AMF Pension has come under fire recently when it was revealed that the company awarded generous pension and bonuses to the company’s highest ranking executives at the same time as it announced cuts to pension payment to the millions of Swedes whose retirement savings are managed by the company.

Elmehagen alone earned around 100 million kronor ($12.6 million) during his ten-year career at the helm of AMF Pension, including a pension payment worth more than 30 million kronor.

The decision to give Elmehagen such a generous pension was approved by Wanja Lundby Wedin, head of Sweden’s Trade Union Confederation (LO), who also sits on the AMF board.

Wanja Lundby Wedin, however, contends that she was in the dark about the payments.

“I feel cheated,” said Lundby Wedin.

“I have not been party to any decision with consequences such that he would receive 30 million kronor for three years. I get angry when I see how much he has received.”

But the chair of the AMF Pension board, Göran Tunhammar, disputes Lundby Wedin’s defence with regard to Elmehagen’s pension payments.

He said on Tuesday that all members of the board received information about the former CEO’s pension at a board meeting in March 2004.

“We went through how we had discussed this and informed about it, but not in any particular detail as it was a complicated agreement with two agreements on top of each other,” Tunhammar told Sveriges Radio (SR).

Tunhammar also added that the board knew that it was a preferential agreement and that it would be very expensive.

No one on the board registered any objections, according to Tunhammar.

Elmehagen’s pension agreement was framed by AMF Pension’s remuneration committee, which was made up of chairperson Göran Tunhammar, Lennart Nilsson from the Confederation of Swedish Enterprise (Svenskt Näringsliv) and LO’s Erland Olausson.

Christer Elmehagen’s pension agreement is detailed in AMF Pension’s accounts which describe “supplementary premiums” for Elmehagen of 700,000 kronor per month according to the contract signed in 2004.

The information is also included in the firm’s annual reports for 2006 and 2007. During the whole of this period Lundby Wedin sat on the board.

Sven-Erik Österberg, a leading Social Democrat politician expressed regret over the revelations on Tuesday recognizing that the scandal has “damaged confidence in the movement and the party.”

AMF Pension’s board has decided to commission the firm’s external accountants to review both the large pensions pay outs to Elmehagen and also the timely decision by the former CEO to move his pension savings prior to an announcement to cut dividend rate payments to pensioners following stock market falls.

Elmehagen moved his 33 million kronor pensions saving to protect the capital and avoid the eight percent cut imposed on all of the firm’s existing pensioners.

PENSIONS

Sweden to increase retirement age from next year

A proposal for changes to Sweden’s pensions system could see incremental increases to retirement age beginning next year.

Sweden to increase retirement age from next year
Photo: Hasse Holmberg/TT

The proposal for reform to state pensions has been agreed on by parties on both sides of the political aisle, reflecting the political agreement which provided for the new Swedish government.

Later retirement age has been justified by the claim that people in Sweden “live longer and healthier lives”, but the last twelve years of life remain characterised by illness and failing health, news agency TT writes.

According to the proposal, the minimum age at which a state pension may be drawn will increase next year from 61 to 62 years. The right to retain employment, the so-called LAS age, will also be increased, from 67 to 68 years.

“We see a problem with the fact that people who want to continue working are not able to. We will now give people the opportunity to do that,” said Mats Persson of the Liberal party, who was part of the parliamentary group behind the proposal.

In 2023, retirement ages will increase again, with the minimum state pension age changing to 63 and the LAS age to 69. The so-called guaranteed pension, which is paid to those who have had little or no pension-qualifying income during their working lives, will also see an increased age limit from 65 to 66 years.

2026 will see further extensions, to 64 years and 67 years for the regular and guaranteed pensions respectively.

In a press statement, the government wrote that longer and healthier lives made the reforms to retirement age possible. Average life expectancy in Sweden has been found to increase by 3.5 hours every day.

But longer life expectancy does not necessarily correspond to better health in senior years, according to research.

International studies led by the Institute for Health Metrics and Evaluation (IHME) and the University of Washington recently found that Swedes have relatively high life expectancy – just under 82 years for both women and men – but that years with good health are considerably fewer, at just under 70 years.

Sweden fell outside of the top ten for countries with the most years of good health, the study found. Japan was the best-performing country, followed by Singapore, Andorra, Iceland and Cyprus.

The pensions proposal could therefore mean that retirement years will become increasingly unlikely to contain many years in which senior citizens can enjoy good health.

Persson told TT he disagreed with that conclusion.

“This agreement is based on the fact that we live longer as well as healthier lives. There is research to support that,” he said.

READ ALSO: How to manage your pension in Sweden – even if you're not planning to stay

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