SPP issue creates market

SPP’s plans to return excess funds to its clients have spawned a secondary market in pension rights in Sweden (see WIR 652/9) . In the course of the November issue rights worth some SwKr200mn were traded. Since the money from SPP is to be used for pension purposes by the employers who receive it, companies that have reduced personnel – therefore having no use for more pensions – have been allowed to sell their rights to companies with growing pension commitments. This being Sweden, the sales are monitored by the so-called Alfa committee to ensure everything is above board. The committee has proved more restrictive than originally expected – for example, insisting a company cannot sell any rights that may be used within 10 years. This could mean up to SwKr10mn or SwKr20mn of the early deals would have to be cancelled. But the price of the pension rights has been creeping up. By early December they were being traded at around 88% of face value, compared with 79% at the first sales in early November. Trades are carried out by SPP itself, which holds tenders, and by the pension broker/intermediary Carnegie, which matches interested buyers and sellers. In the first month 40 or 50 companies traded pension rights valued at some SwKr40mn via SPP’s tenders, and a further 126 companies traded rights for SwKr160mn via Carnegie. Estimates suggested rights worth a further SwKr350mn could be offered in due course.