Swedes enjoy four decades of prosperity

While Swedish households have seen their wealth grow in the past four decades, many Swedes have seen their debts increase as well, according to new figures.

Swedes enjoy four decades of prosperity

Swedish banking giant Swedbank has compared the changes in the financial situation of Swedish households over the last 40 years, looking at incomes, assets and consumption.

According to the study, consumption per person has doubled, but families today are paying less for food and more for accommodation.

The study also showed that a family with two kids today has twice as much money left over after bills and essential expenditure have been paid.

Swedes have also added one week of additional holiday time since 1970 and they work fewer hours per week, according to the study.

Salaries have risen as well, with a pay increase for manual workers rising by an inflation-adjusted 35 percent, while white-collar professions saw their pay rise by 52 percent through 2009.

The improvement to the financial situation of Swedish households has mainly taken place during the last 15 years, however, following the banking crisis of early 1990s.

Child allowance is one of the benefits that have increased during the last four decades while many other social insurance bemefits have decreased or disappeared.

Household wealth is 17 percent higher today than it was 40 years ago, but is very unevenly spread, according to the study.

Average wealth is now 610,000 kronor ($95,000) per person but the median wealth is 60,000 kronor, according to Swedbank’s figures.

Many Swedes have no savings at all.

And over the last four decades Swedish households’ debt has also risen dramatically, especially mortgages.

During this time, the price of a detached house has increased by 1,180 percent, or a more modest 110 percent if inflation is taken into account.

According to Swedbank the shortage of housing alone can’t account for rising home prices, as they have risen independent of inflation.

Moreover, the study showed that prices have risen across the country, even in areas where there is available accommodation.

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Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information: 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.