The Swedish investment fund company, now battling the country’s Fund Selection Agency (Fondtorgsnämnden, FTN) after losing out in its largest procurement to date, has criticised the way the process for letting more premium pensions capital flow to the US market – when it says many domestic savers want the opposite.
The FTN, which is in the long process of repopulating the premium pension system funds platform with quality-assured offerings, this morning announced that Indecap Fonder had now submitted an application to the Administrative Court in Stockholm for a review of the procurement of actively managed global equity funds.
The agency said it would now respond to the application as soon as possible, as requested by the court.
Mats Dillén, chair of the FTN, said today: “It is important for legal certainty that affected tenderers can request a review of public sector decisions.”
He said: “Our assessment is that the procurement has been conducted in accordance with the applicable legislation and rules.”
A day before its appeal was filed by the court on 6 March, Indecap Fonder – a Stockholm-based fund manager owned by Swedish savings banks – launched a broadside at the way the reform to Sweden’s premium pension funds’ platform was being carried out.
“The reforms in the premium pension had good purposes: To raise quality and strengthen protection for savers, but after eight procurements for the new fund market, Indecap can conclude that the very purpose of the reforms has been abandoned and the outcome now affects both pension savers and the Swedish stock market,” it stated in a press release on 5 March.
Mats Lagerqvist, Indecap Fonder’s chief executive officer, said: “We are now reviewing the system legally, which is our way of developing the premium pension system and protecting pension savers.”
Among its criticisms of the procurements, the firm said freedom of choice was decreasing in practice, with the latest process having decreased the number of global funds on the platform by 70%, and it said capital was being concentrated in fewer and larger players, a significant portion of whom were international fund companies.
Indecap said that when the global equities procurement was initiated, it was clear that even funds previously included in the ‘Global and Sweden’ category would be forced to participate in the new category or disappear as an alternative for pension savers.
It said funds in the Global and Sweden category, which had a large proportion of Swedish equities in addition to a global equity component, belonged to a fund category that the FTN claimed was not in demand.
The result meant that around SEK30bn (€2.8bn) was disappearing from the Stockholm Stock Exchange to other countries, Indecap said, adding that this hit Swedish companies.
“In practice, a lot of this capital may end up in the US, where global indices often have heavy exposure, which is remarkable at a time of geopolitical uncertainty and changed savings behaviour, where capital flows in the FTN’s procurement are now moving in the opposite direction to what many savers are demanding,” Lagerqvist noted.
The FTN said the rules around a request for a review meant the signing of agreements with the procured funds would be paused until the Administrative Court had examined the case and made its decision.
“The entities that submitted the winning tenders in the procurement are thus affected in that their entry onto the fund platform is postponed,” it said.
“For pension savers, this means that access to the newly procured funds, with lower fees and high quality requirements, may be delayed compared with the original timetable,” the Tumba-based agency said.
