Average management fee of second-pillar pension funds drops to 1.08 percent

Lawmakers hope the new bill will help prevent European-wide money-laundering.
Lawmakers hope the new bill will help prevent European-wide money-laundering. Source: (Reuters/Scanpix)

The lower level of management fees of second pillar pension funds resulting from an increase in the volumes of pension funds took effect in Estonia on Wednesday, when the average management fee declined from 1.22 percent to 1.08 percent.

"Against the backdrop of a general decline in fees, people saving for a pension should also note that in the past six months, fund managers have put on the market pension funds with significantly lower management fees," Minister of Finance Sven Sester said in a press release.

The average management fee of a second-pillar pension fund declined from 1.22 to 1.08 percent. According to estimates, the average fee may drop below one percent next year and the decrease is set to continue.

The average management fees charged by different fund managers are as follows: Swedbank 0.88 percent, SEB 1.1 percent, LHV 1.26 percent and Nordea 1.44 percent. In 2011, by comparison, the average management fee was 1.5 percent.

In addition, fund managers have recently put on the market index funds whose management fees are significantly lower than the fees charged by actively managed equity funds. The fees for the management of index funds are 0.49 percent at Swedbank and SEB and 0.39 percent at LHV.

In addition to the obligation arising from the law, fund managers have cut fees as a result of competition as well. The fee for the management of Swedbank's K1 conservative pension fund has shrunk from 0.61 to 0.29 percent, while the management fee of SEB's conservative pension fund has dropped from 0.77 to 0.49 percent.

The Investment Funds Act, which went into effect on Jan. 10 of this year, cut the maximum fee for the redemption of a unit in an investment fund from one percent to 0.1 percent; a lower ceiling of 0.05 percent applies to conservative pension funds. Several funds, meanwhile, have stopped charging a redemption fee beginning this year.

Editor: Editor: Aili Vahtla

Source: BNS

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