Voluntary Participation (IPS) Auto Enrollment System (AES) Funds Legislation Data Center

Fund Performance Assessment System

Penalties

Portfolio managers of the funds that are found to perform “relatively unsuccessful” for at least two years in a three-year performance assessment period will be changed by the pension company that founded them. Such funds will not be allowed to be managed by the same portfolio management company for the two years following the last year in which poor performance was found.

Three-year
Assessment
Period

Date of Penalty

2020-2022

Founding pension companies will have to apply to the Capital Market Board (CMB) in February 2022 to replace the portfolio managers of the funds that are found to have performed "relatively poorly" in 2020 and 2021.


Founding pension companies will have to apply to the CMB in February 2023 to replace the portfolio managers of the funds that are found to have performed “relatively poorly” in 2020 and 2022, and the funds that are found to have performed “relatively poorly” in 2021 and 2022.


2021-2023

Founding pension companies will have to apply to the CMB in February 2023 to replace the portfolio managers of the funds that are found to have performed “relatively poorly” in 2021 and 2022.


Founding pension companies will have to apply to the CMB in February 2024 to replace the portfolio managers of the funds that are found to have performed “relatively poorly” in 2021 and 2023 and the funds that are found to have performed “relatively poorly” in 2022 and 2023.


Period (n-2)-(n)

(n) being the end of the assessment period,


  • Founding pension companies will have to apply to the CMB in February (n) to replace the portfolio managers of the funds that are found to have performed "relatively poorly" in (n-2) and (n-1).

  •  Founding pension companies will have to apply to the CMB in February (n+1) to replace the portfolio managers of the funds that are found to have performed “relatively poorly” in (n-2) and (n), and the funds that are found to have performed “relatively poorly” in (n-1) and (n).

Rewards

The founding pension company will pay the portfolio management company an additional fee (success premium) equivalent to 50 percent of the fixed management fee paid to the portfolio manager from the fund management fee collected from the fund within the year in which the funds are found to be “successful” by a yearly performance assessment.

Announcement of Results

Each year, funds that are found to perform successfully or relatively poorly will be announced on the Performance Assessment Results page by the PMC, with their yearly net returns and estimated performance results.