History
In connection with the ATP system which came into effect in 1960, the boards were established for the First, Second and Third Swedish National Pension Funds. These Funds would ensure long-term savings consisting of a basic pension – the state or national pension – which would be the same for everyone, and an earnings-related supplementary pension (ATP).
The regulations established by the Funds’ boards only allowed investments in interest-bearing securities. The management of capital in the three Fund boards was coordinated as one organisation. The ATP system was based on the Swedish people’s pension disbursements funded by mandatory payroll taxes.
In 1974, the Fourth Fund board was established, which was also allowed to invest in listed Swedish equities. Then respectively in 1988 and 1996, the Fifth Fund board and Sixth Fund board were established. The latter was made responsible for the funds from the wage-earner.
However, forecasts indicated that the ATP system was not financially stable and that there was a risk that the AP Funds could be drained a couple of years into the 2000s. The Pension Working Group (Pensionsarbetsgruppen) was introduced in 1991, and in 1994 it presented a policy proposal for a reformed old-age pension system, which subsequently entered into force 1 January 1999.
The reform meant that the first five Fund boards were reorganised into four AP Funds (the First, Second, Third and Fourth). The Sixth Fund board and the newly established Seventh Fund were renamed the Sixth and Seventh AP Funds respectively, while the Fifth Fund board ceased to exist.
The reform meant that the first five Fund boards were reorganised into four AP Funds.
The First to Fourth Funds, as well as the Sixth Fund, became buffer funds which in the long term would manage pension capital according to the same investment rules, thus providing the opportunity to invest in a diversified asset class. The Funds would maximise returns in the long term at a low risk level. They act independently and have separate management plans, investment and ownership policies.
Even though the five Funds compete with each other, partnerships between them have been established for the benefit of information exchange and cost efficiency.