Why establish a new agency for procured funds?
Representatives from the political parties behind the current pension system, has agreed that the premium pension system should be retained but that the Government needs to take greater responsibility for the fund choice architecture and the structure of the premium pension system.
The aim is to ensure that the funds available in the premium pension provides high quality at a low cost.
The procurements shall always be carried out in the best interests of pension savers and pensioners. The Government and the Pension Group have decided that there should be a government agency with responsibility for procuring funds and managing the fund investment offering within the premium pension system.
The agency shall take an independent position and shall deal with its remits based on principles established in law. The agency’s board shall not be subject to political influence, and the Government will not therefore be able to influence the choice of available, Lag (2022:759) om fondtorgsnämnden
What will the new agency do?
The Agency will procure a wide selection of high-quality funds with different risk profiles, in accordance with the new law on procuring funds for the premium pension.
Lag (2022:760) om upphandling av fonder till premiepensionens fondtorg
The Agency will enter into fund agreements in accordance with the same act. These procurements shall be carried out professionally and based on good industry practice. The Agency shall ensure through the procurements that pension savers get genuine freedom of choice, while at the same time it shall be possible for fund managers and funds to be reviewed in a secure and cost-effective manner.
It will also be responsible for phasing out the current fund offering and how the premium pension fund agreements will be transferred to the new fund market.
Will the transition to the new Board mean that fund managers and funds located on the currently connected fund market need to apply for a new fund agreement?
It will not be required to sign a new fund agreement connection with the transition to the Agency.
The legislation regarding the administration of the Premium Pension was changed in 2022. Accordingly, new Fund Agreements can no longer be signed as previously. The only way for Fund Managers to sign a Fund Agreement is to take part of the upcoming procurements. The first procurement is planned to take place during 2023.
The current fund agreements with the Swedish Pensions Agency will be transferred to the new Agency, and will apply until a fund category has been the subject of procurement.
After the procurement of a fund category, the current fund agreement will be terminated and the Agency will then enter into new fund agreements with the new and procured fund managers who have been selected in a procurement process, based on the award criteria set, defined and decided by the Agency based on the new law's framework and requirements. The procured funds will replace the current funds on the platform.
What is the difference between the current fund offering and the new structure?
The current fund market is application-based, which implies that fund managers must apply to the Swedish Pensions Agency to provide a fund on the fund market. If the fund manager meets the criteria’s, the fund management and the Swedish Pensions Agency enter into a fund agreement, and the fund becomes eligible for the fund market.
The new fund management offering will be procured in line with special fund procurement standards, which will be governed by legislation and described in the government’s proposal. This means that various types of funds will be made available and that conditions are imposed on both the fund manager and the fund. The funds will be assesses based on requirements regarding suitability, ability, quality, performance, sustainability, and costs.
The funds that best meet the evaluation criteria established in each procurement will be chosen and may enter into fund agreements with the Agency. The Agency will evaluate and monitor the funds on an ongoing basis.
This means that current fund categories, as well as the number of funds procured within each category, may vary and change over time.
What is the status of the management recruitment for the agency?
The board members are the overall management of the agency. The members of the board are selected by the government.
How many people will work for the new agency?
We are unable to respond at this time. A good prediction is approx. 30 persons, although this will become apparent after we have developed the organization and finalized the overall governing documents. The Swedish Pensions Agency will continue to serve as the host authority and will therefore oversee certain administrative functions on behalf of The Agency.
When will you advertise job vacancies?
After the Swedish Parliament (Sveriges Riksdag) has approved the proposal, vacancies will be posted on the Swedish Pensions Agency's website and the new website of the Agency, which is not yet in operation.
Where will the new agency be based?
Tumba Bruk in Botkyrka south of Stockholm will be the location.
What does the current premium pension fund platform look like?
There are approximately 475 funds to choose from in today's fund offering. These funds collectively manage over SEK 960 billion of Swedish premium pension capital.
On the fund market, there are approximately 8 million savers.
What is happening with the information transferred from the Swedish Pensions Agency?
The New Agency will take responsibility for overseeing the current fund offering and will continue the process of examining, assess, and evaluate the funds on the platform. The current agreements will be gradually terminated over a multi-year period and replaced with new funds obtained.
Pensioners and pension savers will continue to communicate with the Swedish Pensions Agency on fund information and selection.
What is happening with the funds a saver has chosen for their premium pension?
Nothing happens in the first stage. A saver retains his or her chosen funds and can make changes to them in the same manner as previously.
If the saver has chosen a fund that is not available on the fund platform after a specific procurement of the relevant fund category has been completed, for example, because the fund manager chooses not to participate in the procurement or is not chosen and thus does not continue to exist on the fund market, the Swedish Pensions Agency will contact the saver with information about the newly procured funds, what the options are for the saver, and what happens if the saver chooses not to do an active choice.
For a time, there will be funds in the fund offering accordance with current restrictions (which will eventually expire) as well as funds that have been procured in compliance with the new law.
What is happening with the funds/fund managers that currently have fund agreements with the Swedish Pensions Agency?
The Swedish Pensions Agency's fund agreements with fund managers will be transferred to the Agency and will, as a starting point, continue in their current form and any amendments. As new fund categories are procured, the previous agreements will be cancelled and replaced with the new fund agreements.
Which funds will be in the new procured fund offering?
According to the proposed law, the fund offering must provide a variety of funds that are relevant and fit for the premium pension system with varying risk levels and investing orientations, allowing for true freedom of choice. The funds must be efficient, long-term, manageable, and of good quality.
Mutual funds, fund companies, special funds, or specific alternative investment funds can be considered for the fund platform for the premium pension, the details will be decided by the Agency.
The Agency will establish a more precise framework for, among other things, suitability criteria for funds, categories, and the qualitative criteria for procurements based the proposed law.
Will funds currently on the platform have an advantage or will they be treated independently when the Agency procures funds?
No, all fund managers who submit tenders in a procurement will be treated equally. The Agency can according to the new law. only consider the requirements for high quality, controllability, sustainability, and cost efficiency. Fund managers who do not now have their funds on the platform but want to participate in a procurement do not need to register their funds to the current fund platform in order to participate in a future procurement.
Which fund categories will be procured?
The fund categories will be determined by the Agency after it’s been installed. The fund categories may vary over time, as requirements and demand from the savers evolve.
On the fund platform, there will be freedom of choice, which implies that the selection of funds must be broad enough to satisfy most pension savers who want to make their own choice of funds.
How do I become aware that a procurement is being carried out?
We will follow up with more details on where and how information about forthcoming procurements is distributed. The agency will communicate the procurement plans on its future website and through advertising.
What requirements will be placed on the funds that The Agency is to procure?
The requirements imposed on fund managers and funds will most likely differ between procurements and between different fund categories. This will be determined by The Agency based on the new law.
The Agency will provide further information in addition to the legal guidance.
Will there be requirements for sustainability?
Yes, the Implementation Committee is now working to provide ideas for The Agency on sustainability principles, criteria, and standards for funds and fund managers.
