The proposals for the new Sw edish premium reserve legislation is being criticised for not having dealt with the issue of management fees of fund managers.

In mid-October the official investigator Hans Jacobson proposed a state operated unit-linked system open for any fund manager considered fit and proper" by the Finansinspektionen, the national financial supervisory authority. The question of management fees was left to be taken care of by market competition in his proposal.

Swedish media have commented that competition on the domestic fund market has not led to any substantial drop in management fees.

"Politicians believe the question of price should be a deal between savers and fund managers and that individuals by choosing low cost managers would bring about cuts in the fees. That is foolish. That has not worked until now and will not work in the future" writes Mats Wester, Sparoversikt, investment magazine.

Anna Stina Elfving of TCO, a union organising more than 1m white collar workers, claimed that the new state authority will take care of most of the traditional tasks of the fund managers except asset management.

Elfving said that considering the work done by the authority it would not be reasonable for managers to charge as high fees as they would otherwise. She made her comments on the national television business news, A-ekonomi.

Minister of finance, Erik Asbrink, said on the programme that he found it reasonable to open up the question of fund managers paying back part of their fees to the authority.

Wester claimed that some $800m annually could be handed back to the individuals, when the system has matured to maximum estimated size, $80bn by the year 2030. By spring 1999 the first Skr34 bn will be shifted from the debt office to the funds of the individuals' choosing. Mikael Nymen"