AP7 Såfa (state default fund)
AP7 Såfa is the state's default option for the premium pension. If you make no active fund choice, your premium-pension money ends up here. Såfa stands for the state age-cohort management option: a fund whose risk is adjusted to your age, entirely automatically.
The default in the premium pension
Of your pensionable income, 2.5 percentage points go to the premium pension, the part you get to invest yourself. The vast majority make no active choice, and then the money is managed by AP7 Såfa. The fund is built from two blocks: AP7 Aktiefond, a global equity fund, and AP7 Räntefond, a bond fund. The mix between them is set by your age, not by you.
The lifecycle: equities early, bonds late
Up to and including age 55 you are in 100% AP7 Aktiefond, full equity exposure while you have a long horizon left. From age 56 the equity share is trimmed by a few percentage points a year as the bond share grows. By age 75 it has settled at roughly one third equities and two thirds bonds. The idea is simple: high risk while time heals the dips, lower risk when the money is about to be paid out.
The fee and the leverage
The fee is very low, around 0.05% a year, a fraction of what many private funds charge. Against a private choice at 1% or more, the gap eats a serious slice of the capital over decades. A detail many miss: AP7 Aktiefond uses a degree of leverage in the young years, so exposure to the world's stock markets runs a little above 100%. That makes the default more aggressive early in life than a plain global index fund, with the higher risk and potential return that implies.
The couch-potato fund has beaten most
AP7 Såfa is sometimes called the couch-potato fund (soffliggarfonden), as if not choosing were faintly embarrassing. It is not an insult. Not choosing is a perfectly good choice: the default has historically returned more than most active fund picks in the premium-pension system, thanks to low fees, broad global spread and the leverage in the young years. So you do not need to do anything for your premium pension to be sensibly invested.
How to check and switch
Log in at the Pensionsmyndigheten site to see which funds your premium pension is in. There you can switch to your own funds at any time, or switch back to AP7 Såfa, free of charge. Just remember that the premium pension is a small part of the whole pension; the fees and choices in your occupational pension usually make a bigger difference to the final result.
Calculate further
- Public pension calculator: what the state pension builds up to
- Fund-fee calculator: what a percentage point of fee costs over time
- Guide: how the whole Swedish pension system works