The huge investment fund procurement process for Sweden’s reformed premium pensions funds platform officially kicked off late on Friday evening after five years of planning.
The Swedish Fund Selection Agency (Fondtorgsnämnden, FTN) gave official notice at just after 11pm local time on Friday for the procurement of actively-managed European equity funds.
“The notice marks the start of a series of procurements that will be made to offer high-quality funds on the fund platform, with the aim of creating a more secure premium pension system with higher pensions for savers,” the FTN said.
The agency, located in the Stockholm suburb of Botkyrka, revealed that up to six funds would be procured in the tender, which covers actively-managed European equity funds with a primary focus on investments in large- and/or mid-cap stocks.
There are currently around SEK11bn (€929m) of savers’ premium pensions invested in this asset category, in the existing funds platform, according to the FTN. The fund offerings via the existing platform will be gradually replaced as the new procured funds are selected.
The agency said the procurement was being carried out in accordance with the Act Procurement of Funds to the Premium Pension Fund Platform, with a process based on industry practice.
According to that legislation, funds procured have to be cost-efficient, sustainable, controllable, of high quality, and suitable for the premium pension system and the Swedish social security system, the FTN said.
Friday’s tender announcement marks a watershed in Sweden’s long-running efforts to reform the premium pension – the first-pillar system of individual accounts which runs alongside the main pay-as-you-go element of the Nordic country’s state pension, the income pension.
Preparations for the shift to a procured funds platform where savers can shop for investment options, from the current platform where all qualifying providers may offer funds, has been going on since 2018.
The old platform was dogged by fraud and mis-selling scandals, though a clean-up operation has since placed more stringent demands on providers.
In 2022, the government bill on the reform was passed in parliament, followed by the establishment of the FTN.
Mats Sjöstrand, FTN chair, said: “This year, the work for the procurement has intensified and now we have reached this milestone for the premium pension system.”
The FTN has a particular focus on transparency in its procurement processes, and said on Friday that to ensure all potential tenderers were treated equally, no information regarding the procurement would be shared directly with individual tenderers.
“All dialogue relating to the ongoing procurement, including questions and answers, will be handled via e-avrop.com, where questions must be submitted no later than September 4th 2023,” the agency said, adding that it would answer questions an ongoing basis, between 31 July and 8 September.
It warned that all documents received by an authority, such as tenders, were public documents so might be disclosed in their entirety if someone requested access to them.
While information protected by confidentiality would not be disclosed, the agency said it would make an independent confidentiality assessment “which in turn may ultimately be reviewed by a court”.
Sweden’s premium pension system holds around SEK2trn of assets, with roughly half managed on the funds platform and the other half managed by AP7, the state pension fund running the default option.