Luminor charges highest pension fund management fees

Luminor headquarters in Tallinn.
Luminor headquarters in Tallinn. Source: Rene Suurkaev/ERR

Pension fund management fees differ not just between banks but also various funds offered by the same bank. The largest second pillar fund is Swedbank's K60, while the fees are highest for funds offered by Luminor.

Estonia had 24 pension funds with a total volume of €4.75 billion at the end of 2019. Over €1.1 billion of pension assets are kept in market leader Swedbank's K60 fund.

Estonian LHV Bank's L pension fund holds €913 million and SEB's progressive pension fund around €648 million. The first charges a management fee of 0.6 percent and the other 0.72 percent.

The highest management fee of 0.94 percent applies to Luminor's three funds – A, A plus and B. The bank's three funds hold a total of €387 million.

Head of the pension unit for Luminor Baltic Rasmus Pikkani told ERR that pension fund management fees depend a lot on their volume and relevant legislation.

"The larger the volume of the fund or the more money people keep in that fund, the lower the manager's expenses and management fees. It is also affected by the number of investors between whom the fees are paid and laws that fix ceilings for management fees based on volume," he explained.

Pikkani added that a small asset manager cannot offer solutions as cheaply as major players. He also said that one should not overlook productivity when comparing management fees.

"Luminor has managed to offer its clients better yields than cheaper pension funds, despite our higher fees. When it comes to actively managed pension funds, Luminor is the best in almost all risk groups – whether we're talking about three, five or ten-year perspectives," he said.

Funds that sport the lowest fees include the SEB index 100 fund and Swedbank's K10 – both 0.29 percent. Both index funds offered by Tuleva sport a fee of 0.34 percent. The latter's world stocks fund was the largest index fund last year, with €127 million.


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Editor: Marcus Turovski

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