Fewer than half, 44 per cent, of new retirees know whether they have made their own fund choices, are in the default AP7 Såfa, or have chosen traditional insurance in Sweden’s premium pension system, according to a survey by Epinion on behalf of the Swedish Pensions Agency (SPA).

The survey is part of a new report by SPA, New pensioners’ views on risk in the premium pension scheme, which concluded that industry experts need to take significant responsibility for pension savers’ important pension decisions, in combination with the design of the system.

This is because, as indicated by the survey results, new retirees have low knowledge of, and limited interest in, fund savings and risk.

“We see that many retirees have little interest in understanding how their premium pension is invested and what level of risk it entails. This means that the design of the system, as well as which default option is offered among the funds, plays an important role,” SPA actuary, Linda Perkiö, said.

The survey also found that many responded inconsistently to questions about their attitude to risk.

“When we see that many answer differently to similar questions about risk, it may indicate that people are willing to take different levels of risk in different contexts, but also that the concepts may be difficult to understand.

"Therefore, the results of our survey should be interpreted with caution, but they still clearly indicate that knowledge of risk in the premium pension is limited,” she stated.

Furthermore, just over one-third of respondents would prefer stable monthly payments from their premium pension, without changes from year to year.

Whereas just under a third are willing to take some risk in the hope that payments will increase over time. The remaining third are open to taking some risk but want the level of risk to decrease as they age.

“The preferences expressed by this final third of new retirees are relatively well addressed through the default option in the premium pension, which offers a gradually decreasing level of risk from age 56,” Perkiö explained.

The report also stated that the limited interest in actively managing premium pension savings highlights the importance of a well-functioning default option, as well as the possibility of securing a pension by choosing traditional insurance for pension payments.

“Around one in five retirees choose to hand over the management to the SPA. This places high demands on us to manage the traditional insurance responsibly and with a long-term perspective,” she said.

The SPA also highlighted how a lack of knowledge about risk and fund saving also increases the demands on the pension system to have a clear choice architecture that helps pension savers and retirees make well-informed decisions about their premium pension.

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