The new Swedish fund selection agency is now open for business and the first orders for funds will start in the second half of this year, according to its website.
Created by a pension law passed last December, the Swedish Fund Selection Agency is a new independent body that will source, manage and review eligible funds in the Swedish Premium Pension System. He will also oversee fund selection for the $200 billion premium pension fund platform.
The pension group, which includes representatives of the political parties behind the current pension system, said it believes the Swedish government should take more responsibility for the architecture of fund selection and the structure of the premium pension system. The premium pension is part of the general pension and is a form of social security designed to provide financial security during retirement. For individuals, the premium pension system involves depositing a payment equal to 2.5% of the pension base into a premium pension account with the Swedish Pension Agency, which is the premium pension insurer.
The aim of the new independent fund selection agency is to ensure that the funds available in the premium pension provide high quality at low cost. In accordance with the new law, the Swedish fund selection agency intends to purchase a wide selection of high-quality funds with different risk profiles. He will also be responsible for the phasing out of the current fund offering and the transfer of premium pension fund arrangements to the new stock market.
The current stock market is considered “application-based”, meaning that fund managers must apply to the Swedish Pensions Agency to provide a fund on the stock 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 eligible for the market. There are approximately 475 funds in current offering that collectively manage over $91 billion of Swedish premium pension capital.
However, the new fund management offering will be purchased 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. New funds will be assessed on the basis of suitability, capability, quality, effectiveness, sustainability and cost. Funds that best meet the evaluation criteria established in each order may sign funding agreements with the agency, which will regularly evaluate and monitor the funds. As a result, the current fund categories, as well as the number of funds purchased in each category, may vary and change over time.
The new law requires fund offerings to provide a variety of funds that are appropriate and suitable for the premium pension system and that have a range of risk levels and investment orientations. The funds must also be effective, long-term, manageable and of good quality. Mutual funds, mutual funds, special funds or specific alternative investment funds can be considered as a platform for a premium pension fund. According to the agency, it will create a more precise framework for eligibility criteria for funds, categories and procurement quality criteria, among other things.
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Tags: pension funds, Sweden, Swedish Fund Selection Agency, Swedish Pension Agency, The Pension Group