Danish roundup: PensionDanmark, Unipension, Industriens, Lærernes
DENMARK - Pension funds could step up to provide capital for investment in the new wind farms outlined in Denmark’s cross-party green energy deal - as long as conditions are right, says PensionDanmark.
Under the new energy pact, half of Denmark’s energy consumption will come from wind power by 2020 - up from 25% now.
Torben Möger Pedersen, managing director of labour-market scheme PensionDanmark, said: “It is positive that there is now broad political support for the big investment in transforming Danish energy production to sustainable energy.”
This would require capital on a major scale, he said.
“If conditions are right, the pensions sector can contribute to supplying some of the capital - not least in a situation where public sector budgets will be under pressure for many years to come,” he said.
The parties have agreed to build installations providing a total of 3300 MW in new wind power.
As part of this, two new large offshore wind farms will be built at Kriegers Flak between Denmark and Germany (600 MW) and at Horns Rev on the west coast of Jutland (400 MW).
The remaining capacity will come from wind turbines on land and offshore wind turbines in coastal areas.
There will also be investment in biomass and biogas, according to the agreement.
Möger Pedersen referred to the model that PensionDanmark had developed with DONG Energy and the Energy Agency to set up partnerships between pension funds and offshore wind-farm businesses.
Politicians should work this model into the overall energy package to avoid investment partners having to start from scratch every time, he said.
“In this way, the energy agreement could secure the big breakthrough for public-private partnerships in Denmark,” he said.
In other news, pensions administrator Unipension posted profits for last year of between 2.9% and 3.8% for the three labour market pension funds it runs, and reported a rise in membership levels.
So far this year, the funds had already made a profit of around 5%, it said.
Managing director Cristina Lage said: “Overall, we can say 2011 was a satisfactory year for the pension funds in Unipension.
“We have maintained our investment strategy with a high proportion of equities, we are solid as a rock, we have no need for interest rate hedging, and our members receive one of the best account dividends in the industry at 5% before tax.”
The Architects’ Pension Fund (AP) made a pre-tax profit of 2.9%, MP Pension (MP) ended the year with a 3.8% profit and the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD) saw a 3.3% profit.
In 2011, combined membership in the three pension funds rose by 8,000 individuals or 8%, Unipension said.
Meanwhile, Industriens Pension reported a jump in its rate of profit after the labour-market scheme switched to unit-link from with-profits at the beginning of December last year.
In the first 11 months of 2011, scheme members received a return of 4.1%, but in the month of December alone, the profit was 2.1%.
However, including a one-off gain of 23% as a result of liquidating reserves no longer needed under the new unit-link conditions, scheme members saw an overall return of 30% for 2011.
Managing director Laila Mortensen said: “The shift in the pension scheme to unit link has had major significance for the way we have organised our investment strategy.
“Since we made the decision to change the pension scheme, we have placed great importance on keeping reserves intact to secure a large transfer for members in connection with the change.”
This had meant focusing on minimising the risk of losses ahead of the transfer, she said.
Against this background, the investment return achieved was very satisfactory, she said.
Elsewhere, teachers’ pension fund Lærernes Pension said it suffered a drop in contributing members for the first time in nearly 20 years, as councils have axed teaching jobs.
In 2011, there were 1,668 fewer teachers paying into a pension scheme than the year before, with the number of contributing members falling to 81,701 by the end of 2011.
Anders Bondo Christensen, chairman of the Lærernes Pension trustee board, said: “There has been a marked fall in the number of teachers paying into a pension scheme, and this says something about the amount of teaching jobs councils have cut.”
In its annual results statement, the pension fund said it produced a return of 3.8% before tax on total assets of DKK48m (€6.5m).
German, US and emerging markets government bonds had given good returns, while quoted equities had made a loss, the pension fund said.