SWEDEN - Sweden's PPM system, which was the inspiration for the new Danish SP system, is now looking to take its cues from the Danish model as it seeks to overhaulits system.
Karl-Olaf Hammarkvist, a professor at the Stockholm School of Economics who is carrying out a complete review of the system said: “We’re studying the Danish model closely to see if we can pick up some ideas that can be used in Sweden. The Danish model is pedagogically very strong.
“We are very impressed with the way they have approached the idea of risk – they are trying to make people think in terms of how much risk an individual person is prepared to take and that is one of the key things here. So they are coaching the customer more or less, to take a decision that is underpinned by the customer’s risk appetite.”
Savers of ATP’s SP (Special Pension Savings Scheme) now have the option to move theirfunds into a new unit linked scheme. ATP has set up an internet platform called the‘Folkboersen’ or ‘People’s Stock Exchange’ where UCITS providers can place their funds.Currently there are 197 registered funds that savers can choose from as compared to670 in the PPM system.
Hammarkvist noted: “The Danish funds [registered on the Folkboersen] have a crown rating system and also provide information on costs. So once a customer reaches the fundstage, he has the information he needs. “Customers can also benchmark their choice andrisk against a model portfolio for the whole system. So you have a benchmark that you can compare with.”
In a previous interview, ATP’s CIO Bjarne Graven Larsen had said that when setting up the model for SP, ATP had learnt from the PPM experience and had consciously steered away from the more obvious ‘mistakes’ such as the number of funds. ATP also introduced an entrance fee for managers to register for the new system.
Hammarkvist is now expected to kick off a series of meetings with Finance Ministry officials to discuss his preliminary findings.
The new deputy Swedish finance minister, Sven-Erik Österberg, is also impressed with the Danish system.
“Gunnar Lund [former deputy finance minister] had said that there should be around 10 funds, I wouldn't say so few but I would said it should be substantially lower than the 670 funds we have now. The Danish system has around 200 funds in the People’s Stock Exchange. It is acceptable and manageable. If you had around 200, you would have a good spread of the system.”
A suite of liability driven investment (LDI) indices has been launched by STOXX and RiskFirst to aid trustees and consultants select, monitor and challenge managers.
British Airways and the trustees of one of its pension schemes are set to argue over the purpose of a pension scheme, leading to an impactful judgment for DB pensions. James Phillips explores the issue
Bank of England governor Mark Carney has said there is still a lot of data to consider before the Monetary Policy Committee (MPC) can decide when to next hike interest rates.
Savers are not squandering their tax-free lump sums under Freedom and Choice but are taking a more cautious approach to retirement, according to Prudential research.