NORWAY - External managers for the Norway Pension Fund Global will see performance-related fees for all future mandates capped, according to new regulations introduced by Norges Bank Investment Management (NBIM).

Norges confirmed that, as of 10 August, it was agreed external managers would not receive more than $25m (€17.5m) a year in bonus payments for individual mandates, following an earlier investigation by the country's Auditor General criticising the use of contracts stipulating no fee limit.

The contract in question, agreed in autumn of 2008, resulted in the unnamed manager claiming NOK900m (€113m) in performance-based fees.

While the NOK3.1trn fund had previously introduced an undisclosed fee cap for all new mandates, Øystein Olsen, Norges Bank's governor, and Yngve Slyngstad, chief executive and chief investment officer at NBIM, announced details of the $25m upper limit in a letter to the ministry of finance.

Discussing the cap, they said: "Any fees accrued beyond this ceiling may be paid out at a later date, but only if the excess return from inception continues to be at least as positive."

They added: "In the event of high excess returns and the ceiling for payments being exceeded in a particular year, the management agreements are designed in such a way that the recognised liability will never exceed the ceiling for the following year."

According to predictions from the ministry of finance, the Pension Fund Global will see assets under management rise from NOK3.1trn at the end of the year to NOK3.5trn by December 2012.

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