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Pension fund favours banks not savers

Sweden's banks are the only winners from the Premium Pension Authority (PPM) fund system. Despite plunging portfolio values fund managers have managed to pull in billions of kronor from the scheme.

Published: 22 March 2009 15:41 CET

Pension fund favours banks not savers

Fund management firms have earned more than eight billion kronor ($980 million) from the PPM system which was launched in 2000.

Savers have however in contrast lost a total of 33 billion kronor from the PPM system which is the upper tier of the Swedish state pension system with a fixed contribution level collected via the tax system.

The “orange envelope” annual statements have been dropping through the letter-boxes of Swedish households in recent weeks and have made discouraging reading for those hoping to see steady growth in their pension pot.

Pensions savings have declined on average by 0.8 percent per annum since the first payments were set aside for the scheme in 1995.

In comparison with the general state pension scheme, in which the money would have otherwise been placed, which has returned 3.5 percent per annum.

In total Swedes have pumped in 264 billion into the system. The value at the end of 2008 amounted to 231 billion kronor, a decline of 33 billion kronor.

The explanation behind the dramatic fall in value is evidently the massive stock market crash that has occurred over the past year. The development is compounded by the timing of the launch of the system, in 2000, when the last broad downturn in stock market values occurred.

Twint app can be installed on a mobile phone.

“Twinting” money with a smartphone is easy and convenient. Photo by Andrea Piacquadio from Pexels

In Switzerland, the word “Twint” is used both as a noun and a verb.

As a noun, it describes the mobile application which allows you to pay for various goods and services practically everywhere in the country.

As a verb, (“to twint”), it means to send someone money, or receive it, via the same app.

So what exactly is Twint?

Simply put, it is digital cash (not to be confused with bitcoin, which is digital currency) that was first introduced in Switzerland in 2014 and has become very popular since then.

Twint logo. Image by Twint.ch

People like it because it is an easy and quick way to make instantaneous payments, especially in situations when credit cards or physical cash can’t be used.

A big part of its convenience is that it can be used at cash registers, vending machines and parking meters, as well as in online shops — pretty much everywhere in Switzerland, even in places that don’t accept credit cards.

The only similar mode of payment would be your maestro debit card issued by your bank.

This video explains exactly how the process works.

Another advantage of Twint is that you can use it to send money to someone else’s mobile phone — as long as they also have Twint. And you can receive money the same way.

And there are no fees or charges for this service.

How does Twint work?

Anyone can use Twint, but you need a Swiss bank account or a credit card and, of course, a smartphone.

According to Twint website, you need a smartphone with either an iOS (from version 12.2 and upwards) or Android (from version 7 and upwards) operating system and Bluetooth capability (from version 4.0 and upwards).

“It is generally not possible for Twint to be used on Apple devices with an operating system older than “iOS 12.2” or on Android devices with an operating system older than “Android 7”. On Android devices without access to the Google Play Store (e.g. on certain HUAWEI models), the use of Twint app is also not possible”.

But If you have a compatible phone, installing Twint is easy.

Swiss banks offer their own version of the app, and you can download it directly from your bank’s website.

Then, when you use Twint to make a payment, the amount is debited directly from your bank account or credit card.

By the same token, if you receive payment from another Twint user, the money is automatically deposited in your account.

And you are not limited to just one Twint app.

If you have accounts is several banks, or have more than one credit card, you can install and use all of them.

READ MORE: How to open a bank account in Switzerland

Can Twint be used to make payments and receive money from abroad?

For the moment, Twint can be used solely in Switzerland and payments can be made only in Swiss francs – although this may change in future.

“We are, however, working closely with providers in other countries to develop an international and multi-currency solution”, according to Twint website.

You can find more information about Twint here.

READ MORE: Which bank is best for Americans in Switzerland?

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