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Swedish communes threatened by pension time bomb. Some authorities are worried but commune politicians are oblivious.

Monday, 19 March 2012
Swedish municipalities have pension liabilities of Skr216 billion leading to nearly four in ten municipalities insolvent in under generally accepted accounting principles.

"A ticking time bomb", according to Skandia Liv's CEO Bengt-Ake Fagerman. But the Swedish Association of Local Authorities and Regions (SKL) is not worried.

When the pension was allowed to municipalities, at the same time it was reported that pension liabilities had accrued prior to 1998, seen then as a contingent liability - off-balance. As such if the Sweden's 290 municipalities are put together, their pension shortages will come to Skr216 billion, according to media reports.

Bengt-Ake Fagerman, CEO of Skandia Liv, an insurance company, notes that something similar could not have been accepted in a business operation.
"The municipalities have pension liabilities of over Skr200 billion. While we talk on southern Europe of austerity for those countries having shortages of this size and you see it as there being no big problem there, "he said.

But Mats Kinnwall who is chief economist at SKL does not think we should exaggerate the danger of pension liabilities.
"Looking at the sector as a whole, this is no big problem. It is about to finance a hump. It is now and the next ten years that the hump will reach its peak, then it will start decreasing gradually together, "he said.
By Team

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