SWEDEN - Sjunde AP-fonden (AP7), the default fund for Sweden's first pillar Premium Pension Authority (PPM), is to come out in support of a restructure of the fund to incorporate "life cycle" or generation funds as part of its response to the PPM report, Globalpensions.com can exclusively reveal.
Responding to the PPM report, out for consultation until 28 February, Richard Grottheim, executive director, AP7, said the fund agreed that life cycle funds were “a good way forward” although he added that the fund should be allowed to judge the right timing for this move and how the funds should be constructed.
AP7 currently offers both a premium savings fund, which is a default fund, and a premium choice fund, which savers can actively choose.
In its report 'Difficult waters? Premium pension savings on course', presented to the Ministry of Finance late last year, the commission set up to review changes to the system proposed introducing such a profile for the default fund so that risk levels decline as the pension saver gets older, and lifting rules which restrict savers from actively choosing AP7.
In addition, AP7 supports the removal of a restriction which prevents savers from actively choosing the premium savings fund, or returning to the fund once they have left - another suggestion made by the committee.
“If we have a nice performance return and people think I made a mistake in picking that other fund, they should be able to invest in us,” he said. “The only way [currently] to invest in us is by defaulting from the beginning into our fund and that doesn’t make sense.”
By Kristen Paech and Lisa Haines
A number of pension schemes have been prompted to lock in gains with a move into bonds after the estimated deficit across FTSE 100 DB pension schemes improved by £36bn, over the 12 months ending 30 June last year, JLT Employment Benefits found.
HM Treasury has agreed in principle to give NEST a £329m contingent liability guarantee in the event of the master trust's wind up or closure.
AMP Capital has set up a dedicated team to help institutional investors, including pension funds, invest in infrastructure through direct equity allocations.