DENMARK - Increased life expectancy has prompted Denmark's largest pension scheme ATP to make a further DKK700m (€94m) in provisions, the fund said in its interim report.

The DKK438bn labour market scheme made the provisions - equivalent to approximately 0.25% of the guaranteed benefits - as a result of an annual update to its mortality base. That said, these provisions were lower than those made in the last three years.
 
"Compared with the preceding years, the latest update represents a very modest increase in the life expectancies of both men and women," said ATP. Last year, the mortality update triggered extra provisions of DKK 3.9bn, having put aside the same amount in 2005 and DKK 2.4bn in 2004.

ATP reported its profit rose DKK 6.7bn to DKK 77bn for the first half of this year.
 
CEO Lars Rohde said the period had been fairly turbulent in terms of investment, but even so, financial statements were satisfactory.

"The bottom-line profit of 6.7bn has increased ATP's reserves and rendered the scheme even more robust," he said.

Market return on ATP's investment portfolio was DKK 12.7bn or 3.5%, up from the 1.7% seen in the year-earlier period. The fund attributed its profit to Danish equities in particular, which generated a return of DKK 6.6bn, equivalent to a 14.5% rate of return.

"Moreover, the new investments in commodities achieved a healthy return of DKK 0.7bn, or 11.5%," it added.

Looking ahead, ATP said there were prospects for continued strong economic momentum in the second half, though increased volatility and risk aversion in the markets over the summer could continue throughout the period.

"These forces will pull in opposite directions in both government bond and equity markets, indicating that H2 could be marked by price fluctuations without any clear direction," ATP said.