The Swedish Fund Selection Agency (FTN) has unveiled a tender for European and global equity indexes.

The first procurement is for index funds with a primary investment focus on equities in large and medium-sized European companies. The second procurement is for index funds with a primary investment focus on equities in large and medium-sized global companies. FTN intends to procure up to four funds in the European index fund category and up to six funds in the global index fund category.

The existing category of European index funds currently consists of seven funds with a total of 182,000 savers and SEK 15bn invested. The current global index funds on the premium pension fund platform currently consist of eleven funds with a total of 287,000 savers. The pension savers have a total capital of approximately SEK 43bn invested.

FTN said existing fund agreements for the funds in these categories will be terminated, but they will continue to be available on the fund platform until the procurements are completed and the procured funds that have been awarded fund agreements replace the affiliated funds. In total, the two procurements affect 469,000 pension savers with total savings of approximately SEK 58bn.

Commenting, FTN executive director, Erik Fransson, said: "In our efforts to raise the quality of the premium pension system, it is a major and important step to now announce two new procurements. Both procurements are for index funds, where global index funds in particular form the basis of long-term pension savings for many people. We expect the procurements to lead to lower fees and higher quality, which will create the conditions for higher pensions for hundreds of thousands of savers.”

Both procurement specifications include limits for tracking error, a ratio for how much a fund is allowed to deviate from index. After dialogue with the market, FTN has set the tracking error limit at a maximum of 2 per cent for the fund against the benchmark index and a maximum of 4 per cent for the benchmark index against the procurement's category index.

Fund managers who wish to participate in the procurements have until 18 April 2024 to submit their tenders.

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