Sweden should establish an independent committee of experts to oversee its National Pension Funds and set a clear, measurable financial objective for investments to ensure their long-term viability, the OECD has said.

In a report entitled the OECD Review of the Swedish National Pension Funds, the OECD analysed the National Pension Funds, which are responsible for 12 per cent of Sweden’s state pension liabilities and manage assets of around SEK 895bn.

Over the next thirty years, payments are likely to significantly exceed contributions, and by 2040 the size of the funds is expected to have fallen to SEK 400bn, the OECD said.

At the moment each fund is free to set its own investment strategy and objective, but the OECD believes it would be more effective for all to have a single, clear target, so performance could be better measured. Parliament should be asked to approve this new mandate and take into account the impact of demographic changes on payouts.

The report also recommends the Scandinavian country establish an independent committee to oversee the funds, under parliamentary oversight. It should set the objectives and measurement criteria, as well as nominate board members and promote public awareness of the funds’ role within the Swedish pension system.

Other recommendations made are the implementation of the Prudent Person Rule, which allows for the professional investment of assets with stronger governance and oversight rather than new restrictions on investments, and the strengthening of the selection process for governing boards, with more transparency and open to non-Swedish nationals.

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