Inside investment: Pensions management — When big is beautiful

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Inside investment: Pensions management — When big is beautiful

During the financial crisis big became synonymous with bad. But in pensions management super-sizing can seriously increase your wealth.

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The Dutch and the Swedes are the tallest people in Europe. The average Dutch male is 1.843 metres tall, just over six foot. Swedes are a tad shorter at 1.815 metres. Other than being able to look down at vertically challenged Brits and Americans, this additional size comes with few tangible benefits. The same is not true of the respective Dutch and Swedish pensions systems.

David Knox, through the Australian Centre for Financial Studies, has developed a global pensions index. It ranks the retirement savings of different countries according to the benefits paid, their sustainability and the overall integrity of the system. No country receives the top A grade, but both Sweden and the Netherlands achieve a B. Just as in the tallness stakes, the UK and US trail, with a C ranking.

What the Dutch and Swedish pension systems have in common is size. Sweden’s four AP-Fonden, designed to buffer and top up state benefits, are among the 30 biggest pensions plans in Europe. Combined, they would rank third behind two big Dutch funds: ABP (for civil servants) and PFZW (for healthcare workers).

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