As flagged up over the past year by InvestmentEurope‘s coverage (see below), Sweden’s Parliament has ratified proposed changes to the country’s Premium Pension system, PPM, which allows long term savers to self-select funds into which a proportion of mandated pensions savings are directed.
The changes bring in a series of restrictions, that have been developed in response to loopholes in the pre-existing legislation, which allowed investors money to be put at risk – for example, through excessively aggressive and misleading marketing, or by the fact that the platform has included such a large range of funds to choose from, or even by outright criminal activities.
As noted in a Fund Distribution Alert from KPMG, the key features of the new legislation include:
- More comprehensive co-operation agreement between the Swedish Pensions Agency [operator of the PPM platform] and the registered fund
- New performance obligations:
– At least three full-year return history of the fund
– At least three full-year business history of the management company
- Requirements for capital under management prior to registration:
– At least SEK500m of capital in the fund
- Prohibition of telephone sales within the premium pension system
- Increased monitoring by the Swedish Pensions Agency of registered funds.
KPMG notes that a proposed requirement to stop sales when 50% or more of a fund’s managed capital originates from PPM was rejected.
The PPM platform is open to Ucits funds domiciled in any EEA country, including Sweden, which have relied on article 93 of the 2009/65/EC Directive (Ucits IV) to obtain relevant authorisation for distribution into the Swedish market. The regulations matter because the assets tied to PPM are linked to mandated savings; 2.5% of pensionable income is paid to PPM, which means the current SEK1trn size of PPM AUM is expected to hit SEK4.9trn by 2040 (€97.4bn to €477bn), KPMG notes.
A ban on sales and marketing by phone comes into effect on 1 July, 2018. Other requirements will be effective from 1 November, 2018.
The prohibition on sales and marketing via telephone will come into effect on 1 July 2018. All other requirements will be effective as of 1 November 2018.
Full details of the legislation is available here (in Swedish): https://data.riksdagen.se/fil/1BCBC315-B87E-4BA0-A775-33587DAC73D1