Söderberg & Partners. The right of transfer pension insurance policies - PDF

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Söderberg & Partners The right of transfer pension insurance policies Lifelong contract how is it possible? Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 2 Advantages with introducing the right

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Söderberg & Partners The right of transfer pension insurance policies Lifelong contract how is it possible? Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 2 Advantages with introducing the right of transfer The risk carrier of savings in pension insurance and its development will have the right to transfer. Forces the insurance companies into a fair pricing among customer groups Increased competition no longer possible to live on old merits the price is set on the margin even in situations where only 2% transfer may have large effects for all customers Increased comprehension and simplification for Swedes to look after and manage their pensions Everyone can become a major customer ( pension millionaire ) Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 3 Why do products without the right to transfer exist? Guarantee capital is expensive over long-running time cycles the mutual idea implies that you receive in the beginning and give in the end It reduces costs It enables investments in more illiquid assets and the possibilty to receive a liquidy premium Short-termed fluctations in the captial market are leveled out People do not risk to get misguided by non-serious advisors to invest in poor products Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 4 Is it really that difficult? Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 5 Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 6 A new world implies new possibilities Absence of advanced financial products Absence of IT systems Absence of liquidity Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 7 The drawbacks with a right of transfer are to a great extent solved Drawback Guarantee capital is expensive Costs are reduced It is possible to gain advantages through investemnts in more illiquid assets It is needed to level our short-termed fluctations in the market The risk of misleading customers from superior products Solution It is possible to retain the mutual venture capital if rules are created that imply that the saver pays for the obtained guarantee (implicitly or utlized) this if the saver leaves prematurely The finance market and IT systems of today enables the possibility, without significant additional work, to calculate the cost for, and the administrationof, a fair transfer The life assurance companies invest a great share in liquid assets. In addition, the liquidity in the market is with no doubt better than before Today, the financial market offers a great deal of financial insurance products, administration strategies etc. which allows for the management of a transfer at an individual level without the collective features Is the alternative to be lured once and then for always superior? In general, there is a lot that needs to be undertaken to increase the customers requirement/need of protection. This is true for both new as well as existing customers. Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 8 How much capital are we talking about? Categories Estimate (MSEK) Benefit-based plans 650 No Other collectively agreed pensions with restricted right of transfer Capital with major part of right of transfer 500 Yes - new 750 Capital without right of transfer 600 Yes - new Total occupational pension captial What is allowed to transfer? Collectively agreed Privare Occupational pension Change of employer (paidup policy) Change of active insurance (premiedragande) YES NO* YES If employer accepts *Yes, within the plan Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 10 Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL A right of transfer that does not comprise collective agreements risk to create a black hole in the Swedish insurance market 2010 (MSEK) Investment assets on the life assuarance market Mdr SEK Övriga Nordea Handelsbanken SPP Länsförsäkringar Mdr SEK Folksam SEB Skandia X Flytträtt AFA AMF Alecta 0 Fri marknad Parternas bolag Källa: Svenska Försäkringsförbundet Why not do as in Norway? Many of the insurance companies are customer-owned In Norway the transfer-fee is regulated by law, equal to a small amount. If the rules of transfer are too generous it strikes on the customers who do not transfer If the rules are too restrictive, the transfer reform becomes inefficacious Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 12 The transfer fees no detail regulation Transparent Accuisition costs Neutral A well functioning transfer Who wins and who loses? Fund companies Strong traditional companies Weak traditional companies Small advisors New unit linked assurance companies Old unit linked assurance companies Large advisors Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 14 Summary All paid-up policies will be transferabel - if/when change of employment Enables the gathering of the entire capital in one insurance Will lead to increased quality and pressure on prices Market-adjusted transfer fees advocates justice and a functioning transfer A majority of the custmer will not use te right to transfer but will still be benefited - all prices will be set on the margin Söderberg & Partners STRICTLY PRIVATE AND CONFIDENTIAL 15
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