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Sweden close to being a cashless society

Four out of five purchases in Sweden are made electronically or by debit card. With the development of cheaper technology, the country is moving towards a cash free society, according to a new report.

Sweden close to being a cashless society
Photo: TT
"Sweden and the rest of Scandinavia leads the world in terms of cashless trading," said Bengt Nilervall at the Swedish Federation of Trade (Svensk Handel). 
 
Swedes use their debit and credit cards almost every day – an average of 260 transactions per person per year.
 
The picture is very different in southern Europe. In Italy, for example, three-quarters of all consumer purchases are still paid for in cash. 
 
"That is due to the low confidence in the authorities and the banking system," said Niklas Arvidsson, an associate professor of industrial dynamics. 
 
Arvidsson argued that Sweden could become completely cash free but predicts that this development is unlikely until at least 2030.
 
"The familiarity of cash in the hand could prevent this. A recent Sifo survey showed that 2/3 people consider (the availability of) cash to be a human right," he said.
 
Retailers, banks and card companies welcomed the trend with the proviso that customers are able to keep up with developments.
 
A cash free society would lead to increased security for both staff and customers and would cut cash-handling costs – estimated to be around 8.7 billion kronor ($1.2 billion), some 0.3% of GDP.
 
Armed robberies are furthermore in decline in line with the reduction of cash use. In 2012, a mere five bank robberies were committed, according to the Swedish Bankers' Association – the lowest figure in 30 years. 
 
The spread of cards and electronic payments has had a profound effect even on the street level with fruit and veg traders and even retailers of the homeless magazine Situation Stockholm accepting card payments.
 
The spread of electronic payment systems such as Swish are a further addition to the plethora of alternatives for people to transfer small sums without having to resort to the ATM.
 
And even though cash may be dying out in Sweden, the government has announced that a new range of bank notes will hit circulation in 2015. Take a look through the new designs here
 

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EUROPEAN UNION

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:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

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

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