SWEDEN - Sweden's Premium Pension Authority (PPM) is set to launch a new web-based platform to enable its savers to make suitable asset allocation choices based on their risk appetite.
The Swedish web-based platform is similar to Denmark’s internet based unit linked scheme – the Folkboersen or the People’s Stock Exchange – where UCITS providers can place their funds.
Daniel Barr, chief economist at the PPM explained: “In the past, the PPM has focussed too much on selecting managers and not enough on making a proper choice of risk and [asset]allocation, which are the most important decisions when you put together a financial portfolio.
“We are going to give our members a web based tool that will allow them to allocate between different asset classes based on their risk appetite. They can also pick the managers that they want based on their asset allocation decision.”Karl-Olaf Hammarkvist, a professor at the Stockholm School of Economics, who is carrying out a review of the PPM system has praised the Danish system, stating that the PPM would be restructured on the lines of the Folksboersen.
However, Barr said that the Swedish model differed from the Danish in one key respect: “Unlike the Folkboersen, which has a kind of life cycle structure which says that if you belong to this age group this is the asset allocation that you should opt for, we will not provide that kind of asset allocation advice.”
The Danish Folkboersen, however, has not been a great success in Denmark with only around 10,000 deciding to invest through the platform and only 10% making an active choice.
Recently, the PPM chairman, Tomas Franzen said that the Danish model had been “overestimated” and pointed to the lack of active participation, noted that “it is clearly not a solution”.
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