The Swedish Fund Selection Agency (Fondtorgsnämnden, FTN) has formally launched its second tender for bids to supply investment funds on the new, procured platform within the country’s first-pillar premium pension system.

Yesterday afternoon, the agency – as expected – gave notice for the procurements of the two fund categories global equity index and European equity index.

Erik Fransson, executive director of the FTN, said: “In our efforts to raise the quality of the premium pension system, it is a major and important step to now announce two new procurements.”

Noting that both procurements were for index funds, he said global index funds in particular formed the basis of long-term pension savings for many people.

“We expect the procurements to lead to lower fees and higher quality, which will create the conditions for higher pensions for hundreds of thousands of savers,” Fransson said.

After dialogue with the market, FTN said, it had set the tracking error limit for the mandates at a maximum of 2% for the fund against the benchmark index, and a maximum of 4% for the benchmark index against the procurement’s category index.

“The two procurements comprise a total of approximately SEK58bn [€5.2bn] and up to half a million premium pension savers,” the FTN said.

Fund managers had until 18 April to submit their tenders, it said.

Both of the parallel tenders stipulate a primary investment focus on equities in large and medium-sized companies.

“FTN intends to procure up to four funds in the European index fund category and up to six funds in the global index fund category,” the agency said.

On the existing premium pension funds platform – which is being phased out – there are currently seven funds in the European index funds category with 182,000 savers and total capital of approximately SEK15bn.

The global index fund category, meanwhile, consists of 11 funds with 287,000 savers and around SEK43bn of capital invested, according to the FTN.

Read the digital edition of IPE’s latest magazine