AS SEB Varahaldus notifies of changes in the conditions and prospects of mandatory pension funds

20.05.2019 - 18:10

AS SEB Varahaldus (SEB Varahaldus) notifies of changes in the conditions and prospects of SEB Conservative Pension Fund, SEB Optimal Pension Fund, SEB Progressive Pension Fund, SEB Energetic Pension Fund and SEB Energetic Pension Fund Index (hereinafter SEB pension funds or funds).

On 12 December 2018, the Riigikogu adopted amendments to the Investment Funds Act (IFS), lowering the management fees of mandatory pension funds and relieving several investment limits and risk spreading requirements established for mandatory pension funds. The referred amendments to the IFS entered or will enter into force on different dates in 2019. Conditions and prospects of SEB pension funds will be changed, in order to implement the investment limits and risk spreading requirements relieved with the amendments to the IFS, and to bring the provisions related to management fees of funds into conformity with the amendments to the IFS. The changed conditions and prospects will enter into force on 2 September 2019.

These are the major changes:

The maximum equity risk of SEB Energetic Pension Fund Index will be increased to 100% instead the current 75%. The new name of the fund will be SEB Pension Fund Index 100. As a result of the increased maximum equity risk allowed for the fund, the risk level of the fund will also change – it will be a fund with high risk level, which is suitable mainly for investors with high risk tolerance. For existing investors, we therefore recommend to revise in time if the risk level of the fund is in compliance with their risk tolerance and to replace the fund units with a pension fund that has a lower risk level if necessary.
The list of investment objects allowed for SEB Conservative Pension Fund will be extended. Hereafter, the fund may also invest into shares, real estate, precious metals, and other investment objects allowed for mandatory pension funds by the law in the extent of 10 per cent. Therefore, similar to other pension funds (except SEB Pension Fund Index 100), the costs related to maintenance and assessment of an immovable property may be paid from the account of SEB Conservative Pension Fund in the future.
Hereafter it is allowed to grant loan on account of SEB pension funds to the persons, who have issued debt securities, into which the funds may invest.
Maximum allowed percentage of instruments not traded on regulated market in the assets of SEB pension funds (except SEB Pension Fund Index 100) will increase to 50% (formerly up to 30%).
Instruments not traded on regulated market may hereafter include also non-transferable securities.
Allowed percentage of securities and money market instruments issued by a single person in the assets of SEB pension funds (except SEB Pension Fund Index 100) will increase to 10% (formerly up to 5%).
Allowed percentage of securities and money market instruments issued by a single consolidation group in the assets of SEB pension funds (except SEB Pension Fund Index 100) will increase to 20% (formerly up to 10%).
Allowed percentage of units or shares of a single investment fund in the assets of SEB pension funds will increase to 20% (formerly up to 10%).
Allowed percentage of deposits into a single credit institution or credit institutions belonging into the same consolidation group in the assets of SEB pension funds (except SEB Pension Fund Index 100) will increase to 20% (formerly up to 10%).
Hereafter, SEB pension funds (except SEB Pension Fund Index 100) may invest into shares or units of the funds managed by the management companies belonging into SEB Group, which are not public, or which are closed-end, in extent of up to 10% of the assets of the fund (formerly up to 5%).
Allowed percentage of the entire open risk position of derivative instruments in the assets of SEB pension funds will increase to 50% (formerly 10%).
The restriction of open net position of foreign currency (formerly up to 50% of assets) will be cancelled in SEB pension funds (except SEB Conservative Pension Fund).
Hereafter, SEB pension funds (except SEB Pension Fund Index 100) may invest up to 40% of the assets of the fund directly into immovable property (formerly 10%), whereby the acquisition cost of an immovable property item may not exceed 10% of the value of the assets at the moment of its acquisition (formerly 5%).
Maximum base rate of management fee of SEB pension funds will fall to 1.2%. Base rates of management fee of SEB Conservative Pension Fund and SEB Pension Fund Index 100, which were considerably lower than the mentioned rate, will remain valid. The management company will not take the performance pay specified in IFS for the management of SEB pension funds.

SEB Varahaldus has considered the changes in the conditions and prospects of SEB pension funds essential. Detailed overview of the changes in the conditions and prospects of SEB pension funds and the opinion of SEB Varahaldus about their impact on unit holders is available on the web page of SEB www.seb.ee/fondikursid.

The changes in the conditions of SEB pension funds were approved with Resolutions No. 4.1-1/58-62 of the Financial Supervision Authority of 13 May 2019. Changes in the prospects have been submitted to the Financial Supervision Authority for information. The changed conditions and prospects can be revised on the web page of SEB www.seb.ee/fondikursid and in the offices of SEB all over Estonia. Unit holders are entitled to receive explanations of the importance of the changes in the conditions.

For further information of the changes made in the conditions and prospects and explanations of their importance, contact us by phone 665 5100 or e-mail address fondid@seb.ee.