Government proposal closes many of savers’ favourite funds
Savers will no longer be able to choose some of the most popular funds on the Swedish Pensions Agency’s fund marketplace. This will be the result if funds with more fund saving in the fund marketplace than outside it are closed down – which is one of the measures being proposed in a memorandum published today by the Swedish Ministry of Finance and entitled “A secure and more sustainable premium pensions system”. Many of the other proposals presented in the memorandum are, however, good and should have been implemented long before now.
The Government’s proposal includes a requirement that sales in the fund marketplace of funds which derive over 50% of their fund assets from premium pension savings be stopped. The reasoning is a desire to ensure that funds are competitive both outside and inside the premium pension system. But the proposal will throw out the baby with the bathwater.
“One of the memo’s proposals – the 50% requirement – is misguided,” says Fredrik Nordström, CEO of the Swedish Investment Fund Association. “It will harm savers, not strengthen consumer protection. Many of the funds at risk of exclusion aren’t just popular, they’re amongst the marketplace’s very best funds in terms of historic returns and charge levels, so of course savers have heavily favoured these funds over the years.”
The proposal affects one in six funds in the fund marketplace – or around half of the assets and two out of every three savers with their own fund portfolio – and 7 of the 10 most popular funds will be hit.
“It’s not just the successful equity funds that risk being blocked – the funds hit by this Government proposal include funds with low charges, generation funds, or funds that have been specifically tailor-made for premium pension savings in some other way, much like the default fund option,” says Fredrik Nordström.
“We really need to take a step back here and think about what we are trying to achieve with a proposal that would close down many of the best and most popular funds in the system, and that would shift future savings to the default fund – a fund that active savers have already deselected. If the funds are behaving disreputably, then they should be removed, not have their sales blocked. It’s the other 29 proposed measures that should be used to exclude disreputable operators,” says Fredrik Nordström.
For further information, contact:
Fredrik Nordström, CEO, the Swedish Investment Fund Association
+46 8 506 988 01 / +46 70 219 35 20 / email@example.com
Eva Reimers, Head of Communications, the Swedish Investment Fund Association
+46 8 506 988 06 / +46 70 644 31 70 / firstname.lastname@example.org