Sweden’s New Fund Selection Agency opens for companies
Sweden’s new fund selection agency is now open for business and the first procurements of funds will begin in the second half of this year, according to its website.
The Fund Selection Authority was created by a pension law that was adopted in December last year and is a new independent authority that will procure, manage and review eligible funds in the Premium Pension System. It will also oversee the selection of $ 200 billion in premium pension fund platform.
The pension group, which consists of representatives from the political parties behind the current pension system, said that they believe that the Swedish government must take greater responsibility for the fund selection architecture and the structure of the premium pension system. The premium pension is part of the general pension and is a form of social insurance that aims to provide financial security during the pension. For private individuals, the premium pension system means that a payment corresponding to 2.5% of the pension base is deposited in a premium pension account with the Swedish Pensions Agency, which is the insurer for premium pensions.
The purpose of the new independent fund selection authority is to ensure that the funds in the premium pension provide high quality at a low cost. In accordance with the new law, Fondvalsverket intends to procure a wide selection of high-quality funds with different risk profiles. It will also be responsible for phasing out the current fund offering and transferring the premium pension fund agreements to the new fund market.
The current fund market is considered to be “application-based”, which means that fund managers must apply to the Swedish Pensions Agency to provide a fund in the fund market. And if the fund manager meets the criteria, the fund management and the Swedish Pensions Agency enter into an agreement and make the fund market-eligible. There are approximately 475 funds in the current offer, which together manage over $ 91 billion in Swedish premium pension capital.
However, the new fund management offer will be procured in accordance with special standards that will be governed by the new law. This means that different types of funds will be made available and that both the fund manager and the fund must meet certain conditions. The new funds will be assessed on the basis of suitability, ability, quality, performance, sustainability and costs. The funds that best meet the evaluation criteria established for each procurement may sign fund agreements with the authority that regularly evaluates and monitors the funds. As a result, current fund categories, as well as the number of procured funds within each category, may vary and change over time.
The new law requires that the fund offering provide a variety of funds that are relevant and suitable for the premium pension system, and that have a number of different risk levels and investment orientations. The funds must also be efficient, long-term, manageable and of good quality. Funds, fund companies, special funds or specific alternative investment funds may be eligible for the premium pension fund’s platform. According to the agency, it will establish a more precise framework for, among other things, suitability criteria for funds, categories and the qualitative criteria for procurement.
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Tags: pension funds, Sweden, Fondvalsmyndigheten, Pensionsmyndigheten, Pensionsgruppen