DENMARK - PensionDanmark, the Danish labour market pension fund, has seen most its first-half return wiped out by recent market turmoil, despite improving its pre-tax investment return to 1.6%.

Having pulled back from the -1.7% negative return n the same period the year before, PensionDanmark reported in its interim figures "at the end of August, the investment return for the year was 0.5% before tax,", a return which the fund still described as "satisfactory".

There has also been strong growth in client numbers, contribution levels and total assets as chief executive Torben Möger Pedersen said : "We have gained 25,000 more clients in the last 12 months, and are now up to 526,000 members."

Contributions were up 11% year-on-year to DKK4.3bn, while total assets had risen to DKK66bn - up DKK12bn from the same time last year, he said.

"The renewal of the collective agreement in the spring means further growth in pension contributions," added Möger Pedersen.

And the half-year investment return of 1.6% was 60 basis points above the benchmark and satisfactory in the light of market conditions, he continued.

"The fall in index-linked bond prices, as a result of the government's proposal to change the rules on the taxation of pension returns, lowered the return by 0.7 percentage points," he said, albeit adding PensionDanmark expected this loss to be made up once the final version of the new tax rules had been drawn up.

Equity investments produced a return of 10.3%, while private equity returned 8.9%, according to the interim report.

"There was also a positive contribution to the return from investments in property and hedge funds," said PensionDanmark.

"Even though the developments of the past two months look as if they will reduce the year's return, PensionDanmark's reserves are so large that members can certainly expect that we…will keep to the announced preliminary account dividend of 6.0% after tax for 2007," said Möger Pedersen.

PensionDanmark said new solvency rules, which took effect on July 1, 2007, also strengthened its free reserves by DKK800mn.

"It is positive that we finally have modern solvency rules which take account of how much individual pension firms have taken on in terms of guarantee obligations," Möger Pedersen said.