Swedish trade body calls again for clarity on PPM rebate data

With an aggregated rebate worth SEK2.6bn (€303m) set to be paid out to long term savers invested through the PPM system, the Swedish Investment Fund Association has again called for more clarity around relevant performance tables – which still do not reflect the impact of the rebate.

The rebate is made possible because the funds in the PPM platform effectively only have one customer, which is the Swedish Pensions Agency, which aggregates purchasing power. Per fund it negotiates individual rebates depending on how much capital is allocated via its platform to any particular one. Individuals receive the rebates on the funds in their PPM portfolio once annually.

However, most users of the PPM system are actually unaware of the rebate – according to a 2012 survey, only one in 10 were aware of its existence. Compounding the ignorance is the fact that the performance data for funds listed on the PPM platform do not take into account the impact that the rebate has at the individual fund and account level.

The net effect is that savers believe they are getting a lower return than is actually the case, were the effects of the rebates included in the data, principally in terms of how it affects the annual fee.

The Association gives the example of the Didner & Gerge Aktiefond, an equity fund that carries a 1.22% fee, but which is offered on the PPM platform at a much lower fee of 0.35% including the rebate.

However, the Pensions Agency’s tables show returns based on the higher 1.22% fee being deducted. The effect, the Fund Association said, is that for the five years to 2012, the average annual return should have been reported as 9% rather than the 8% figure implied.

The Fund Association added that it has always pushed for more clarity of information around funds on the PPM platform, but that the performance tables still lacked any information about the rebate and its importance.


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