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Collectum to name new ITP managers for initially €440m

SWEDEN - Next month Collectum, the Swedish organisation that pools money within the country's ITP programme for white-collar employees, will announce the appointment of asset managers to handle the flow of funds into its new defined contribution scheme.

Collectum has stated that premium income in the first year will be at least SEK4bn (€440m) and when fully functional after 30 years or so the new plan will generate flows of SEK20-25bn.

Under reforms agreed by the social partners who own Collectum last year, employees born in 1979 and later will join the new DC ITP programme. Collectum is currently assessing tenders for the business.

The existing DB ITP scheme will continue and new white-collar employees born in 1978 and earlier will be allocated to it. It includes some 1.6m people in 27,000 companies. Until recently occupational pensions mutual Alecta had a virtual monopoly on managing the SKK20bn a year mandate.

Under the new DC system, members will have to create their own pension portfolio by choosing a manager for a minimum of 50% of their pension contributions and they also have the option of choosing a second for a maximum of 50% of their account.

Consequently, the tender is in two parts: to manage the main part of the pension assets and to offer a second fund product.

Initially, it was expected that the new system would be implemented from the beginning of 2007, but it has now been put back until mid-year.

The members' choice of fund managers will be made retrospectively, according to industry sources.

How many and which companies will manage the assets will not be known until next month.

Collectum will name between two and five companies to manage the main pension funds and between two and five companies to provide the optional funds, a Collectum spokesperson told IPE.

Industry players have made it clear that they want the business and that they are anxious that there be more rather than fewer companies on Collectum's list.

"Everyone in the industry is interested in being part of the new scheme and the probability of being part of it is larger if Collectum selects five players rather than two," said Magnus Erkander, acting CEO at Nordea Life and Pension.

In a recent letter to financial newspaper Dagens Industri Nordea Life CEO Britta Burreau appealed to Collectum to select five rather than two companies in order "to create a more competitive environment."

"Right now there's a kind of an auction going on," Alecta spokesman Johan Anderson told IPE. "We have made it clear that we hope to be one of the new suppliers."

Alecta had been the manager of the DB occupational pension since the ITP plan's inception in 1994. The social partners created Collectum in 2002 as part of a move away from DB to DC, according to the Collectum spokesman.

However, this position was dented earlier this month when regional airline SAS said it was withdrawing the SEK7bn in assets for its Swedish pilots' pension fund and transferring them to Handelsbanken Life & Pensions.

The ITP assets of the remaining SAS white-collar staff in Sweden will stay with Alecta, SAS director, compensation and benefits, pension and insurance director Britt-Inger Fredriksson told IPE. She said that they amounted to a further SEK7bn.

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