Swedish Pensions Authority unveils new demands for asset managers

Sweden’s Pensions Authority has published a list of tougher requirements for potential investment providers participating in the first-pillar Premium Pension System (PPM), as a long reform process comes to fruition.

The system, for which AP7 is the default provider, has been subject to a regulatory review in an attempt to improve standards and cut the risk of savers investing in sub-standard products.

Erik Fransson, head of the Pension Authority’s Fund Task Department, said: “For pensioners, the changes that are taking place will increase the security of the premium pension fund marketplace.”

From 1 November, investment providers operating in or wishing to join the system’s funds marketplace will have to reach a minimum assets threshold for funds run outside the PPM. Each asset manager will permitted to list a maximum of 25 funds on the PPM’s marketplace.

They will also be required to give an account of the business history of the fund manager and a “relevant and coherent return history for a fund”, the Pensions Authority said.

Other requirements include a minimum level of sustainability work in the administration of funds; a demand for good practice and suitability within the PPM; and the stipulation that asset managers’ actions must not damage the PPM.

In addition, a fund agreement must be signed for each fund. Currently, cooperation agreements can include several funds run by the same company.

The requirements were established after the Swedish parliament passed legislation aimed at shoring up the scandal-hit PPM last year.

The proposal was drawn up in conjunction with the Swedish parliament’s cross-party pensions group following input from many stakeholders and experts, including Cardano’s Stefan Lundbergh and independent consultant Mats Langensjö.

The authority also said that, as of 1 July 2018, there will be a requirement for savers to sign agreements on the exchange of funds and a ban on telephone sales.

The PPM is the defined contribution part of the Swedish state pension, which allows individuals to allocate a proportion of contributions to private investment providers or use the lifecycle-based default option, AP7’s Såfa.