Ice,
Swedish retirement system
Last year it was decided that about 2% of your income
should be placed in a personal account and be used
for buying into different stock market funds.
A typical government agency was hastily put together,
with the responsibility to create and maintain the
system to handle the individual accounts.
Obviously, the political merits weighed heavier than
computer system knowledge (not very rare, anywhere).
The agency got 8 months (and plenty of money) to implement
this new system. They spent the money on bringing in a US
consulting company that promised to bring the system up
within the allotted time frame.
The deadline passed and the whole approach was scrapped.
Now all taxpayers have an account with the Swedish central
bank, accruing some interest hopefully.
The new deadline is set at the end of this year.
If there is a working system by then, I expect Jan-Feb
to be strong as all the money collected will be invested then.
A good point is that the government has set a limit of around 0.2% for the fund management charges, instead
of the usual 1% - 2%.
Another good feature is that you can change between
funds as often as you wish without any charges at all.
The problem, as I see it, is that it will create big differences in future pensions for different people.
If somebody bets on a winner and the neighbour bets on
a loser, one of them is going to be very upset.
With regard to the Royal Swedish Envy, a burden put on
everybody's shoulders is not that bad, compared to
the success of a lucky few.
Successful fund-picking is not that simple, particularly
if you have never meddled with stocks, bonds and funds before.
Anyway, most banks and insurance companies have had on-line
fund accounts for years. Just using an existing, working
system and scale it up from 500K to 5M accounts would have
been so easy. Perhaps to easy, when the new agency had to
prove that their existence is a necessity.
If the new scheme survives Y2K, I'll report how it works out.
Regards
Per S |
