In December, after four and a half years of wrangling, the Swedish government came to a decision on a wide-ranging review of the country’s pension system and, in particular, its five state pension funds.

The surprise conclusion was that no change would be made to the $150bn funds, which were set up to meet potential shortfalls within the Swedish state pension system. This was despite heavy criticism that the funds were overly expensive to run.

It had been proposed that two of the funds be axed and a National Pension Fund Board set up to determine new return targets and investment strategies for the remaining three schemes.

Per Bolund, Sweden’s deputy finance minister

But last month the government announced that the reforms had been postponed “indefinitely” following resistance from opposition parties.

For Per Bolund, Sweden’s financial markets and consumer affairs minister, that meant many months of hard work had come to nothing.

In August he told FTfm that the Swedish pension system was at great risk if the reforms did not go through.

When asked how he now felt about the postponement and the fact that his proposals had been discarded, the 44-year-old shows great self control. Displaying a masterclass in restraint, he says: “I’m disappointed.”

The tone of his voice tells another story. While Mr Bolund tries hard to remain nonchalant about the U-turn, the heads of the five pension funds, known as the AP funds, have been quick to hail victory.

Just six weeks before it was announced that the government review had been scrapped, the heads of the four largest AP funds had written an open letter to the state condemning the proposed changes, calling them “short term” and “politically motivated”.

The chief executives and chairmen of AP1, AP2, AP3 and AP4 — whose jobs were ultimately at risk — said that the overhaul would have had a negative impact on the investment performance of the funds, which would harm pensioners as a result.

Mr Bolund says of the AP fund chiefs’ reaction: “It is no surprise. Why would any of them be interested in decreasing the size of their own ranks? The reforms were a way to make the management of the AP funds more efficient and that would have involved cutting costs.”

Among the mooted reforms, aside from axing two of the funds, was a reduction in the salaries of those remaining at the three buffer funds. The belief was that pay was too high and should not be benchmarked against private sector companies but against other public authorities, such as the central bank, where salaries are far less generous.

“The amount of money going towards the management of the funds continues to increase. Yes, those costs are starting from a low base, but if they continue to rise it will impact the stability of the AP funds,” says Mr Bolund, who is a biologist by education.

The AP fund chiefs had also argued that the move to cut two of the five state funds would have made the remaining three vulnerable to political interference. The AP funds were originally split into several smaller vehicles due to fears that one large scheme would become too much of a political temptation.

In the open letter sent in October, the heads of the AP funds argued that the plan to create a National Pension Fund Board would have revived that threat of political interference.

“The proposed governance of the funds is unclear and bureaucratic,” they wrote. “The proposals to establish a national pension fund board and the ability for the government to have an influence . . . will present the prospect of short-term political micromanagement.”

Mr Bolund, who completed part of his MSc at the University of Stirling in Scotland, says: “There was an interpretation that there was some sort of political agenda and some sort of political involvement, but that of course was never the case. Any problems on that front could have been easily resolved.”

And Mr Bolund, who is also Sweden’s deputy finance minister, believes the reforms are not completely dead and could be revisited once the more pressing political concern of immigration is tackled.

Sweden, long regarded as Europe’s most welcoming country for migrants, is embarking on an immigration crackdown amid public anxiety over record inflows of refugees.

Mr Bolund says: “The problems with the AP funds are not so acute and do not need to be solved right now. Other issues on the political agenda are more concerning.

“However, we do have agreement between the different parties on some of the proposed pension reforms and we will move ahead with those when the time is right.”

In particular Mr Bolund flags up the issue of responsible investment as one of the areas where there is a consensus for reform, perhaps unsurprising given he is a member of the Swedish Green party.

He recently told delegates at a responsible investment conference held in London that the Swedish government would examine how matters of sustainability could be better integrated into pension fund decision making.

He told the audience: “We have to see that we are in a new world where sustainability and profits are one. If you don’t take sustainability into [consideration] you will lose out on profits.”

He says: “In the modern world we need to move further ahead with this. If the AP funds do not do more in terms of responsible investment, then this puts the entire Swedish pension system at risk.”

CV

Born 1971

Education 1992-96 MSc (biology), Stockholm University and University of Stirling, Scotland
2000-02 Doctoral level studies, Department of Ecology, Stockholm University

Career 1997 Research assistant, Environmental Strategies Research Group
2002 Political adviser, Ministry of Enterprise Energy and Communications
2006 Member of parliament
2010 Opposition city commissioner for the Swedish Green party, Stockholm
2011 Member of parliament and member of the committee on finance
2014 Minister for financial markets and consumer affairs, deputy minister for finance

Sweden’s ministry of finance

Employees 501 (as at end of 2014, latest figure)

Location Stockholm

Ministers Magdalena Andersson, finance minister, Ardalan Shekarabi, minister for public administration

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