Although mandated contributions drive ongoing pension savings towards funds on Sweden’s PPM platform, new research by the Swedish Investment Fund Association suggests more than three-quarters, 76%, of Swedes are saving by investing into funds beyond the PPM platform.
The key reason for using funds to save, cited by the 1,000 randomly selected Swedes interviewed for the results, is to have an economic ‘buffer’. However, the results also suggest that despite looking favourably at use of funds, many Swedes are still unaware that fund returns are shown net of fees.
The survey, done by TNS Sifo Prospera on behalf of the Association, found that the 76% using funds in addition to PPM do so privately or via workplace pensions. Some 65% invest privately into funds. Once PPM is accounted for, it means that every person in employment in the country is saving via collective investments.
Proportion of funds used for:
(Source: Swedish Investment Fund Association; 47% funds in workplace pension; 65% private fund investments; 76% private investments and workplace pensions; 100% PPM)
The proportion of those surveyed who felt that funds are the best method for long term savings stood at 34% – up some 4% from the last similar survey two years ago, in 2016.
Best form of savings:
(Source: Sifa; 2018; left to right: funds, direct owned equities, traditional insurance; bonds; savings account; amortisation of loans)
Additional key findings include:
- 9/10 households with children have some form of savings for the children; 54% save via funds and an equal ratio have a savings account for the children; 6/10 said funds are best for this purpose
- 85% feel comfortable with their private investments in funds – up from 77% in 2016
- About half of respondents have sold or changed funds in the past year; with the need for money the key driver (28%); followed by dissatisfaction with returns (22%)
- The most important comparators when evaluating a fund include past performance, cost and peer performance.
- A third of respondents said that they always consider fees before buying a fund; but just a quarter know that fund fees are always accounted for when returns are published
- Some 47% of Swedes save monthly into funds directly; But more women, 51%, than men, 43% do so; the most common level of monthly savings is between SEK1,000-1,999 (€97.4-194.7) – which represnts a decrease from the most common range two years ago.
Ranges of monthly savings: