Danish labour-market pension schemes announce merger
DENMARK - Danish labour-market pension schemes FunktionærPension and Dansk Erhverv Pension are to merge to form a larger scheme with 90,000 active members, said PFA, which will run the new scheme.
Both schemes are currently administered separately by PFA, a mutual company and Denmark's largest occupational pensions provider, and together they receive around DKK2bn (€269m) in annual contributions.
PFA said the move was prompted by the recognition that being small in the pensions market had become more difficult.
PFA's group director Lars Ellehave-Andersen said: "You get the best pension scheme by exploiting economies of scale."
The organisations behind two existing schemes - trade union HK, the Confederation of Danish Employers (DA) and the Danish Chamber of Commerce (Dansk Erhverv) - agreed the framework for the new scheme.
The scheme will be called Pension for Funktionærer (Clerical Workers' Pension), and will cover HK's private sector membership.
Ellehave-Andersen said making use of economies of scale resulted in lower costs, better returns and the chance to offer the best products and service on the market.
"We can do that in the new common pensions solution, at the same time as retaining the influence of the organisations through the Clerical Workers' Pension scheme," he said.
Jørgen Hoppe, chairman of HK Handel (HK Trade - one of the union's four sectors), said: "By merging FunktionærPension with PFA, we have secured our members' pensions for the future."
This would provide security even for those members with many years to retirement, he said.
"At the same time, we are getting more pension for the money with the new scheme because of lower prices and better returns," Hoppe said.
PFA and FunktionærPension formed a strategic partnership back in 2007, which involved PFA taking a 52% stake in the labour-market scheme.
The firm described that as the first step towards a larger union, and added that the parties had now gone the whole way in establishing a completely new common pension scheme for the entire private sector clerical workforce.
This summer PFA has increased its stake in FunktionærPension to 100% in connection with the new deal.
As things stand, each scheme has around 45,000 active members.
PFA said the new scheme would come into effect in September.
Pension schemes in Denmark have faced increasing pressure to merge due to competition and the anticipated effects of the upcoming Solvency II reserve requirement rules.
The rules will have more impact on schemes offering traditional with-profits pensions that include yield guarantees.
Earlier this year, financial sector scheme FSP announced it would merge with the larger provider AP Pension.