86% of new PPM members opt for default fund
SWEDEN- Sweden’s PPM system has taken on a further Sek216m (e23.5m) from the latest influx of new members. Of the 196,000 joining the scheme for the first time, 86% preferred not to choose a fund and instead ended up in the default AP7 fund. Those 14% of new savers not in AP7 selected, on average, average 3.1 funds.
An additional Sek185m in the seventh fund takes its total assets to Sek24.3bn. Richard Grottheim, vice president of AP7, says the percentage ending up in the default fund is in line with last year’s new additions.
Of 500,000 new contributors to the national system last spring only 18% made an active choice and as with the latest entrants, most were aged between 18 and 27.
Research by the PPM suggests that this age group has little interest in pensions and in choosing funds. But, says Grottheim, “you cannot expect this age group to be conscious about their retirement. These figures should not come as a surprise to anyone,” he says.
New contributions to the fund take the PPM’s total asset value to Sek81bn, 13% down from a book value of Sek93.7bn
In February the PPM scheme received a Sek20bn cash injection when contributions from its 4.9m members’ 2000 earnings were introduced into the system.
To date, 62% of all members have chosen where to invest their contributions while the remaining 38% have automatically ended up in the default AP7 fund.
Within the PPM system, the number of funds on offer continues to grow, up from an original 465 to 628.