Danish labour-market pension fund PensionDanmark saw its business volume grow by 16% in 2014 largely on the back of pension transfers from other providers.
Publishing its 2014 annual report, the labour-market pension scheme said contributions climbed to DKK12.5bn (€1.7bn) in 2014, from DKK10.7bn the year before, representing a rise of 16%.
The rise in contributions was particularly down to transfers of pension deposits from other companies, in cases where members were consolidating their savings within PensionDanmark, it said.
Chief executive Torben Möger Pedersen said: “We have never before achieved such large rises in all the central parameters such as return, contributions and total assets in one year.”
Investments returned DKK16.1bn last year, up from DKK9.1bn in 2013.
In percentage terms, the annual return for members aged 40 rose to 10.5% for 2014, up from 9.3% the year before, and to 10.6% for those aged 65, up from 3.9% last year.
PensionDanmark’s total assets rose to DKK171bn at the end of 2014 from DKK152bn a year before, and membership increased to 662,107 from 642,178.
However, in its annual report, the pension fund said pension transfers in 2015 were expected to be lower than those seen in 2014 because last year had been affected by special factors.
For 2015 and the next few years, it forecast continued moderate growth in regular contributions because it said growth in employment and wage-related costs at those businesses whose members were part of the PensionDanmark scheme was expected to be limited.
Meanwhile, pensions and insurance industry association Forsikring & Pension (F&P) warned that a new law requiring 25% of construction land to be used for social housing will hit pension funds’ property investments and disrupt existing projects.
The new planning act just adopted by the Danish government could force pension funds and other investors to sell 25% of their construction land for social housing, the association said.
The law would mean lower returns on investment in urban development to the detriment of current and future pensioners, it said.
Per Bremer Rasmussen, chief executive of F&P, said he had “great respect” for the political desire to have a more mixed residential composition, but he warned this would have a cost.
“If 25% of construction stock is now suddenly reserved for public housing, the price will be lower than the market value that was the original condition for the investment,” he said.
The association was particularly angry that the law would be applied retroactively, Bremer Rasmussen said.
“It is totally unacceptable that the law also applies to current residential projects,” he said.
“Pension companies went into projects with full confidence in the existing detailed local planning frameworks.”
These local plans would now be overridden by the law, with the demand that there should be a high proportion of social housing, he said.
F&P said it had repeatedly objected to the new law.
Bremer Rasmussen said that, under the new law, the City of Copenhagen municipality could force investors in the Carlsberg City urban construction project to sell 25% of their construction land to a housing association.
Carlsberg City is a big building project in Copenhagen, with 564,000sqm of land on the old Carlsberg brewery site being developed over the next 10-15 years.
The project is 20%-owned by pension provider PFA, with labour-market fund PenSam owning 15% of it, insurer Topdanmark holding 15% and Carlsberg and property organisation Realdania holding 25% each.
Bremer Rasmussen said the new law cast doubt on whether the government wholeheartedly wanted the insurance and pensions sector to participate in solving Denmark’s growth challenges.
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