The Swedish government has tasked the country’s financial watchdog with mapping the fees charged by investment fund providers, aiming to bring those costs down – using the example of the much cheaper terms achieved by the Fund Selection Agency (Fondtorgsnämnden, FTN) in the premium pension system.
“High fund fees erode long-term savings,” said Niklas Wykman, minister for financial markets. “In order to pressure fund companies to lower fees, the Swedish Financial Supervisory Authority [Finansinspektionen, FI] will now be tasked with mapping and analysing the collection of fees.”
In addition, the FSA would propose measures that made the fees clearer, he said, adding that the aim was for savers to receive higher returns over time.
The FSA is to report on the exercise by December this year.
The ministry said there were currently large differences between fees on the Swedish funds market, not least between the cost of funds in the premium pension system and those distributed outside it.
Including the Pensions Authority’s administration fee, average fees within the category of global index funds are 0.076% – one of several fund categories that has already been procured by the Fund Selection Agency – compared with the median outside the premium pension system of 0.35%, the ministry said.
“Through the FTN’s upcoming procurements of funds for the premium pension fund market, these fees will likely be further pressured,” it added.
However, the ministry did qualify the comparison, by noting that average fees for funds in the premium pension system had been centrally negotiated, covered large volumes and that the fund distribution differed in several ways from that of funds outside of the premium pension system.
The FTN is in the process of reforming the premium pension funds marketplace by replacing the funds offered on it, category by category, with procured quality-assured offerings.
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