PensionDanmark achieves record-high return despite market turbulence
DENMARK – Investment returns at PensionDanmark edged higher in 2012, and business volumes increased, as the labour-market fund's focus on property and infrastructure kept its portfolio "robust".
Return attribution after tax for a typical scheme member was 8.4% in 2012, up from 8.2% the year before, according to the fund's full-year figures.
Torben Möger Pedersen, chief executive at PensionDanmark, said: "Despite the turbulence in the financial markets, we achieved a record-high yield of DKK12bn (€1.7bn)."
This compares with 2011's DKK10.5bn.
"We have maintained our position as one of the most cost-effective companies in the pension sector, with healthy growth in our membership intake and contributions," he said.
He said PensionDanmark's investment profile focused strongly on investments in real estate and stable alternatives including wind turbines, bank loans and export credits in order to make the portfolio more robust at a time when listed markets were extremely volatile.
The fund has a strategic asset allocation of 16% to stable alternatives for 2013, including 8% in property and 8% in investments in infrastructure and sustainable energy.
The fund also had a good balance of investments in equities and interest-rate instruments, Möger Pedersen said.
This investment policy had ensured an attractive yield in spite of the changeable climate, he said.
"Although the financial crisis has restricted the scope for investments, we have delivered constantly high investment returns for members year after year," he said.
Membership increased by 16,000 during 2012 to stand at 633,000 at the end of the year.
Total contributions rose by 1.8% to DKK10.7bn, and total assets grew by 14% to DKK139bn.
The administrative costs ratio climbed to 2.6% from 2.2%, but the pension fund said most of the increase was due to non-recurring expenses related to the change of insurance administration platform.
With this element stripped out, the ratio was 2.1% in 2012, according to the fund's annual figures.