Changes are afoot at theDkr54bn (e7.3 bn) LD (Lonmodtagernes Dyrtidsfiond) fund originally set up in the 1970s as part of anti-inflationary moves. This fund has been run as a closed fund since the 1980s, when contributions stopped. Some 1.3m Danes have accounts with LD – but no one under 40!
One of the main changes will be that from 1 July 2005, those with accounts will be able to transfer these to other pension arrangements, including pension funds, bank and insurance plans, which come within the Danish tax regime. They will also be able to move into the new ATP ‘Folkeboersen’ (see above).
While the average sum built up with LD is around DKr 41,000, a typical account where the maximum possible contributions paid in per job of Dkr 4,380 has accumulated since the 1980s to Dkr64,000. This is a return of over 10% per annum, points out Dorith Vangklo, head of equities at LD in Copenhagen.
The changes at LD also encompass moving its activities in the direction of a commercial asset management, says Vangklo. LD has a team of 45, including support staff, and is to deploy its resources by managing assets on a third party basis. “This is being done through a specially set up subsidiary, as LD itself cannot take in new assets,” explains Vangklo. While the new operation is able to offer a full range of investment services, it is likely to focus on Danish small caps and private equity, where LD has built up considerable holdings and expertise.
The idea is that as there is an outflow from LD, there should be other investors prepared to take on investing in these otherwise relatively illiquid assets.