SWEDEN - The Premium Pension Authority (PPM) has hired Aon Consulting to further develop its online fund selection tool "Lotsen", which has been labelled a failure by some due to low usage by members since inception.
The tool, launched last December, was designed to assist people confused by the complexity involved in investment decisions to choose their asset allocation.
According to the PPM, the tool may need to be “further developed” and in this work, the authority “may need support in the calculations and with second opinions”.
“This may apply to support for everything from the assumption of volatilities, returns and correlations to constructing simulation models that may possibly take other pension savings into account,” the PPM noted.
An Aon spokesperson confirmed that the consultancy had been awarded a three-year contract, with the firm being the PPM's main financial consultant.
In September the PPM appointed ratings firms S&P Fund Services and Wassum Rating AB. The ratings, to be integrated into the information used by Lotsen (“pilot”), will be published on the authority’s web site from early next year.
According to reports, a local newspaper branded Lotsen a failure after just 4,056 out of a potential 100,000 users took advantage of the sysem since its launch.
In addition, Aon has been selected to undertake an asset liability management (ALM) study for the PPM in order to find a well-balanced investment strategy taking into account both assets and liabilities.
“Within the with profit annuity product there is an asset side and a liability side,” the PPM said in its tender document.
“The liability side consists of the guaranteed commitments that PPM has given pension savers, the so-called actuarial provisions (FTA). As of 31 December 2006, PPM has to report the risk that assets do not cover liabilities (FTA) to the Swedish Financial Supervisory Authority (FSA) in accordance with the so-called traffic light model.”
The appointment was part of a tender launched by the PPM in January for financial consultation services which also included support during procurement and implementation of external asset managers, socially responsible investments, debt management and evaluation of external asset managers.
The PPM currently offers about 750 funds to savers. Assets under management are expected to amount to SEK245bn as of the beginning of 2007.
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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