Regarding adjustment of fund agreement
The Swedish Fund Selection Agency has decided to adjust the fund agreement. The adjusted agreement, version 5.0, will come into effect on 21 November 2023. You do not need to take any action.
The changes are due to the new legal requirements concerning, among other things, the premium pension fund platform and the establishment of the Swedish Fund Selection Agency, which entered into force on June 20, 2022.
The changes relate to the fact that after June 20, 2022, the Swedish Fund Selection Agency is the government authority that represents the state in relation to the fund agreements previously entered into with the Swedish Pensions Agency and that the previous application procedure for entering into fund agreements has been repealed.
This translation of the fund agreement into English is available as a service. The fund agreement is written in Swedish.
Please note that it is the 5.0 version of the fund agreement in Swedish that is the legally binding version of the fund agreement. The English translation is only available as a reference.
Fund Agreement 5.0
Fund Agreement 5.0 - English translation
Forms and instructions
Once the fund has become eligible on the fund platform, the Agency will continuously review the fund’s and the fund manager’s compliance with the Social Insurance Code and the terms and conditions of the fund agreement.
If any changes are made in relation to the information provided at the time of the application, based upon which the Swedish Pensions Agency made its assessment and decision to allow the fund manager to offer a fund on the premium pension fund platform, it is important that the Agency is notified hereof.
During the contract period, the fund manager pays an annual audit fee that currently amounts to SEK 32,000 per fund. In addition, the fund manager is responsible for the cost of any mailings to premium pension savers due to information needs related to, for example, fund events or other measures taken by the fund manager.
The price reduction model applied pursuant to the fund agreement, which is described in detail in Appendix A to the fund agreement, means that the fund manager receives an invoice from the Swedish Pensions Agency every quarter. The invoice amount corresponds to the estimated reduction in fees to be paid to the Agency by the fund manager in accordance with the fund agreement. Following price reduction, a fund's fee cannot exceed 0.68 percent for an equity fund, 0.35 percent for a fixed income fund and 0.44 percent for other funds (mixed funds and generation funds).
The size of the price reduction also depends, inter alia, on the size of the amount the Swedish Pensions Agency has invested with each management group.
On the Swedish Pensions Agency's website, the premium pension saver can see both the fund's annual fee and the fee the saver pays adjusted for the price reduction.
Trade and administration
All trading in fund units is done through the Swedish Pensions Agency's Focus system. The fund manager shall, on an ongoing basis with some frequency, report on fee charges, costs in the fund, acceptance of trading orders, share prices (NAV), confirmation of executed trading orders, information on trading days, reporting of holdings and any dividends from the fund.
This is largely done manually as the Swedish Pensions Agency does not have automated fund trading. The Swedish Pensions Agency imposes requirements on daily trading with the exception of what is stated in the fund's trading calendar. The detailed reporting requirements are set out in the Fund Agreement, see in particular Appendix B and in the Focus Manual.
During the contract period, the fund manager is responsible for providing certain information to the Swedish Pensions Agency on an ongoing basis as set out in the terms and conditions of the fund agreement.
Pension savers have the opportunity to obtain information about individual funds and to carry out various comparisons on the Swedish Pensions Agency's website. The Swedish Pensions Agency therefore collects, processes, and quality assures the fund information. The collection of data is done through a web interface where the fund manager is responsible for and inputs the data. For information on the registration process, please see the Focus Manual.
In Focus Fundinfo, fund managers shall also update certain information with a certain time interval. All texts must be presented in Swedish.
|Initially and upon change
In order to comply with the fund agreement, the fund manager shall, in addition to the continuous disclosure, also inform about fund events and other changes relevant to the contractual relationship.
The duty to provide information includes circumstances relating to external asset managers, any recipient fund and its fund managers, as well as related parties.
The Swedish Pensions Agency shall, without delay, be notified of, for example:
- Legal incidents such as sanctions and injunctions from public authorities, permit issues of importance.
- Changes to the fund's investment policy, change of benchmark index, if assets under management outside the premium pension system are less than the statutory requirement of SEK 500 million.
- Trade issues that may lead to problems in connection with ordering such as lack of liquidity in relevant markets, investment-related matters such as split/divisigon of shares, trading halts in connection with mergers, for example.
- Merging of funds and transfer of fund management.
- Changes in fund rules and prospectus.
- Changes in ownership structure, composition of the board of directors, management team, and those responsible for control functions.
- Dependencies and conflicts of interest.
- Any comments made by the depositary regarding, for example, valuation issues.
- Change of external asset manager, depositary, management company.
- Changed fees and remuneration models.
Please note that the Swedish Pensions Agency does not provide any advance notice regarding specific issues. The answers in the Q&A are for guidance only. The final assessment of the Swedish Pensions Agency is set out in its decision in each individual case.
Information to the Swedish Pensions Agency
The fund agreement contains a number of conditions regarding a fund manager's obligation to provide certain information to the Swedish Pensions Agency, sometimes within a specified time.
The fund manager shall, inter alia, notify the Swedish Pensions Agency of significant changes regarding the fund and the fund manager’s organisation and activities etc. of importance to the fund agreement and the cooperation with the Swedish Pensions Agency.
The duty to provide information may refer to, for example, sanctions and investigations, change of external asset manager, new owners or board members, and may also include circumstances relating to, for example, related parties and external asset managers.
The reason why the Agency needs to have certain information is both in order to ensure contractual compliance with respect to, for example, suitability and for the Agency, as an insurer and platform owner, to be able to implement the necessary changes to the Agency's system.
The Agency shall also inform the relevant pension savers in writing of any changes that the Swedish Pensions Agency considers relevant to the fund choices of pension savers.
Why is a fund subject to a trading halt and what does it mean?
A fund may be subject to a trading halt while the Swedish Pensions Agency reviews a new circumstance in relation to the terms and conditions of the fund agreement, if a fund manager or fund is deemed to be in breach of a contract term, or if a fund agreement has been terminated, for example in connection with a merger, and the fund's last trading day has passed. A trading halt means that the fund is currently not available to pension savers and no new funds are invested in the fund.
What is a management group and what role does it play?
A management group consists of a group of funds that have a marketing and/or brand connection through fund managers, external asset managers, or a group of companies. The Swedish Pensions Agency's decision on which management group a fund should belong to may affect the calculation of the price reduction to be paid by the relevant fund managers to the Swedish Pensions Agency.
What happens if a fund has less than SEK 500 million in assets under management outside the premium pension system?
In order to operate on the fund platform, a fund must have at least SEK 500 million in assets under management outside the premium pension system. This is a legal requirement as well as a contract term. The size of the capital shall meet the requirements at the time of the decision regarding a fund manager's application and thereafter on an ongoing basis throughout the contract period. Capital from the fund manager's own funds and from funds within the group of companies or management group of which the fund manager is a member may not be included in assets under management outside the premium pension system. The same applies to any external asset manager's funds.
If a fund covered by a fund agreement at any point has less assets under management outside the premium pension system than required, this constitutes a breach of contract and the fund manager shall notify the Swedish Pensions Agency hereof without delay. If the externally managed capital is not restored within a certain period of time, the fund agreement may be terminated.
What is required for the track record to be relevant and representative?
The requirement for a relevant and representative track record means that, according to the Swedish Pensions Agency's assessment, the fund's investment policy, risk profile, etc. must not have changed or change significantly in the last three years. The purpose is to enable the evaluation of the fund and its management.
In order to comply with good practice in the premium pension area, the fund shall also meet the requirement of at least three years of continuous, relevant and representative track record on an ongoing basis during the contract period.
The Swedish Pensions Agency therefore especially reviews the fund's fund rules, annual reports, portfolio composition, and benchmark indexes. Particular focus is placed on asset classes, targeting certain geographical areas or industries, distribution between small/medium/large companies, duration, etc. that do not fit with the fund's investment policy, the way in which the fund has been marketed or the consumer protection perspective that the Agency has to consider.
What requirements does the Swedish Pensions Agency have on sustainability in the management of the fund?
The Swedish Pensions Agency’s minimum requirement is that all fund managers and external asset managers that, to any extent, provide asset management in the fund or other funds in which the fund invests shall have signed and be subject to the UN Principles for Responsible Investment (PRI), or be subject to the signing of PRI principles made by another legal person within the fund manager's or the external asset manager’s group of companies.
Furthermore, it is a regulatory requirement and a prerequisite for entering into a fund agreement that fund managers submit and undertake to submit the information set out in the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector.
The Swedish Pensions Agency may also request other information about a fund manager's sustainability work, etc. The information shall primarily be provided by the fund manager via the Agency's website.
Customer due diligence (KYC) Swedish Pensions Agency
The Swedish Pensions Agency is a shareholder and thus a customer of the fund managers who offer funds on the platform. For this reason, the Swedish Pensions Agency may be the subject of a fund manager's questions regarding, for example, KYC and money laundering. The premium pension system is a closed system and the capital originates from the social pension contributions that employers pay to the Swedish Tax Agency based on income. For more information, please contact the Swedish Pensions Agency.
What is the definition of an external asset manager?
External asset manager (often referred to as investment manager) is a legal person that the fund manager engages or cooperates with for asset and fund management services. External asset managers and fund managers may be part of the same group of companies.
What happens when the external asset manager is replaced?
A fund manager shall inform the Swedish Pensions Agency of the replacement or addition of the fund's external asset manager so that the Agency can assess whether the external asset manager meets the terms and conditions of the fund agreement and can make adjustments in its systems.
Why does the Swedish Pensions Agency consider certain holdings in own funds inappropriate?
Inappropriate investments violate the code of conduct in the premium pension sector. Inappropriate investments include, inter alia, investments in funds within the same group of companies or an external asset manager’s group of companies (feeder funds and investments based on an objective analysis are exempted). The reason for this is the risk of unchecked conflicts of interest. Examples of holdings that may be allowed are non-fee paying index funds and funds where the investment is only aimed at temporarily managing the fund's cash flow.
How do you terminate a fund agreement?
The fund agreement is of indefinite duration. A party always has the right to terminate the fund agreement, subject to the notice periods set out in the fund agreement. In the event of certain special circumstances which prevent the fund or fund manager from participating on the fund platform, it is the fund manager's duty to notify the Swedish Pensions Agency thereof and terminate the fund agreement. Before the expiration of the fund agreement, a plan for winding-up must be developed and implemented and the Swedish Pensions Agency shall inform the relevant pension savers.